Prigozhin is setting things up so he doesn't get the blame when the boot lands. If the Ukrainians wreck the Russian Armies shit, he'll be able to say "wasn't me, I even warned the idiots ahead of time!" Playing Devil Advocate for a moment, Prigozhin and Wagner are in the position they really do need to get the fuck out of the front. Due to how ragged the Wagner been worn out, and needing to rest, recoup and regenerate. Prigozhin using his predicament to publicly give the Russian military exactly what it wanted good and hard while relieving himself of a now very unfriendly (political) grenade.
From wonking I have seen about Wagner:
You need to remember there are two Wagners (and really 3 with the Prison Brigades). There is the 'core' of professional soldiers with SOF experience getting trained by retired SAS instructors and having their SOPs written by South African mercs, and then there is the moblik-tier rabble you use as guards and scouts so the majority of losses aren't absorbed by the core. This 2nd tier has its own levels, but if you are going to take losses you try to direct them there instead of to your main force.
Wagner's 'core' force, never overly large to begin with, is still largely intact. You've got your usual accumulation of casualties just due to warzone attrition, but they haven't gotten BTFO in any meaningful way. (Daily Reminder: The Wagnerites who were massacred in Syria were local militia and 2nd tiers who were nearing contract completion, not any 'core' members)
Wagner's "cushioning" force is what has been ground down and out. They are supposedly in very bad shape and have been for several months, because of the high-casualty tactics Wagner uses. Supposedly the 2nd tier was starting to get mutinous, which is why the Prison Brigades got created so command could calm them down.
Usually, local allied militia form the bullet sponges that protect the 2nd tier force from the worst of it, but the Donbros were getting sick of the losses incurred and started telling Wagner to go screw when they needed some guys to spot machine gun nests. They then used the lowest ability of 2nd tier, but had resolve-under-fire issues and as they tried to send the more skilled 2nd tier in, they got pushback from "I am not renewing my contract" to "I am going to frag the command tent if I think they're going to do that to me".
So Wagner is still very viable as a military force. Command is intact, supply is still good, the most trained and dangerous units are still intact. What is depleted is their cannon-fodder - which is going to severely limit Wagner's ability to conduct operations as they've gotten used to conducting them until it is replenished.
The only thing that has really degraded for Wagner is sustainability - if they started taking 'core' losses those would hurt, and their ability to not take them is greatly reduced at present.
Which is of course the entire problem with marauding bands in Russian territory. It makes Putin look weak and ineffectual, and calls into question his ability to take Ukraine if he can't even protect his own territory. They don't have to cause damage so long as they just look like they're causing damage.
Counter point: Makes him look weak for what audience? Do you think Russian state media is reporting on that other than "A bunch of yooknik supported traitors were BTFO by our powerful armed forces, see this poorly staged photo as proof. These acts of unchecked aggression are why we need to re-holomor Ukraine."
And do you think he give a fuck what the opinion of a EU/US blue checkmark is?