Over the past year, cryptocurrencies have become a lot more popular worldwide. A few years ago, you would only hear about crypto through word of mouth, but nowadays you can find crypto advertisements everywhere.
Huge soccer teams like Manchester United and Paris Saint Germain are sponsored by crypto companies, the Super Bowl halftime break was full of crypto ads, but also Formula 1 has a big crypto presence. There are ten teams in F1, eight of which are sponsored by a company in the crypto industry.
However, the collaborations between F1 and crypto companies are being criticized from different angles. For example, the collaborations would not be in line with F1's efforts to become more sustainable. Also, the link between crypto and criminal activities is often made.
Despite these criticisms, F1 team bosses are very positive about their crypto sponsors and the acceptance of crypto. Here's what the bosses had to say:
Christian Horner looking for technologies that can improve sustainability
Cryptocurrencies that work with the Proof-of-Work (PoW) consensus algorithm often have a large negative impact on the environment. This is because mining these coins generally consumes a lot of energy. Bitcoin (BTC) is an example of a Proof-of-Work coin.
Red Bull's team boss, Christian Horner, also recognizes that the sustainability argument is very important. Nevertheless, he is more inclined to look for technologies that can improve on that, rather than ignoring the crypto sector.
An example of such an improvement is the Proof-of-Stake (PoS) consensus algorithm, the counterpart of the Proof-of-Work consensus algorithm. Unlike PoW, PoS consumes much less energy because it does not require computing power to process transactions.
Red Bull is sponsored by two crypto companies, ByBit and Tezos. Tezos (XTZ) is an example of a cryptocurrency that uses Proof-of-Stake.
Toto Wolff: "Crypto industry is already aware of the sustainability issue."
Mercedes team leader Toto Wolff is convinced that the crypto industry is already very aware of the issues surrounding energy consumption. According to him, crypto companies have long been working to solve these problems.
And this view also seems to be true. For example, Ethereum is in the process of rolling out the ETH 2.0 upgrade, with the network switching from Proof-of-Work (not sustainable) to Proof-of-Stake (sustainable). Ethereum (ETH) is the second-largest cryptocurrency currently and has a leading role when it comes to innovations within the crypto industry.
Wolff also wanted to emphasize that energy consumption is not the only thing that matters:
"The sustainability aspect is extremely important, but it's not just about mining and the energy consumed. It's also about where that energy comes from. But you can't cut yourself off from modern technology, it's definitely a market that's going to grow."
Furthermore, Wolff foresees a bright future for crypto. He expects crypto to take over traditional banking, as it offers advantages in many areas. His team, Mercedes, is sponsored by FTX.
The rise of crypto in Formula One and other major sports is no surprise. Crypto companies are growing fast and want to show new users that they are trustworthy and not among the many scams in the industry. Therefore, sponsoring a major soccer team or an F1 team is a quick way of gaining trust.
The positive statements of influential people such as Christian Horner and Toto Wolff will also contribute to the increase in trust in crypto.