If you are a fan of racing cars and crypto and are wondering about how these two poles-apart sectors partnered then this is the article for you. Earlier, this year F1 crypto sponsorships became a reality as the racing federation felt that this source of sponsorships would prove better than the ‘tobacco revolution’. Thereafter, several cryptocurrency deals were cracked by Formula 1 (F1) in order to get rid of tobacco companies ruling them.
The Tobacco Revolution To Be Hindered
F1 had earlier tried to acquire non-trade support from different possible sources. The most prominent attempt was made in the early 1960s through a deal that was cut by Yeoman Credit, a finance house. However, it was then ascertained that the tobacco sponsorships were necessary to keep the momentum going as they significantly upgraded the game.
The contribution was notable enough since the next Grand Prix presenting Gold Leaf support for Lotus didn’t have Clark performing in it after a legendary racer, Scot, died in an F2 race. After this incident, numerous tobacco companies fought against each other in order to be able to fund various F1 teams at that point in time. These included roll-your-own papers, cigars and cigarillos, pipe and chewing tobacco, and snuff brands. If these companies were linked to tobacco leaves in a remote manner they decided to choose sidepods and wings that would be used to apply brand logo stickers. Some of them also incorporated anti-nicotine patches and other ‘quit smoking’ symbols.
The tobacco industry’s gains also extended into the Grand Prix, with brands like John Player & Sons and Marlboro, sponsoring several teams and events in the contest. Meanwhile, British American Tobacco was a step ahead of all other companies as it entirely purchased the Tyrrell Racing Organisation lock along with stock and empty barrels. These acquisitions were then moved to Brackley where the company had invested millions in a space-age factory. The team was then renamed BAR and was sold again to be rebranded as Brawn GP before finally being known as Mercedes F1.
The peak of tobacco sponsorships was in the mid-2000s which was ironic as at that time the EU was deciding on whether to ban any kind of tobacco promotions or not. The move was about to shatter the entire market but was delayed for quite a significant amount of time. These regulations were implemented in 2006 while the last model to join the team was ‘Ferrari’, which also emerged to be the last one to completely depend on funding from the tobacco industry. It also garnered support from Philp Morris, the parent company of Marlboro, till 2021 even though it stopped displaying any tobacco logos since 2010.
F1 Crypto Sponsorships: Why Such A Move Was Taken?
Due to the ban on tobacco promotion and advertising, F1 decided to venture out into other sectors of funding, which included computer software and tech startups, beer and liquor companies, and even financial organizations. However, out of these sectors, no one managed to ace the race as it was the crypto domain that was preferred by the F1 federation. But companies operating in those fields did achieve a notable stand within the F1 formulation.
As Benetton was sponsored by the beer label Bitburger, its rivals Veltins and Warsteiner decided to fund Williams and McLarens respectively. The recent additions to the list of contributors are Ditto HSBC, Credit Suisse, RBS, and Santander. The tech companies that made it into the list were Dell, HP, and Lenovo. Later, several teams agreed to sponsorships from the cryptocurrency and blockchain domain. They have also considered non-fungible tokens for the same. The latest addiction toward the crypto space can be justified by the recent developments in the space. The advancement of blockchain technology is what lured several companies and F1 into believing it.
However, apart from the achievements the crypto space made till November 2021, there was a prolonged period of ‘crypto winter’ thereafter, which has still not ended. Seeing crypto sponsor F1, experts suggested that it was considered to be risky and untrustworthy. Amid such harsh market conditions, Red Bull cracked a deal worth $150 million with Bybit that would extend to the next three seasons. This deal was undertaken to benefit the partnership that the latter shared with McLaren concerning NFT sponsor Tezos.
Christian Horner, the Red Bull team head, during the Barcelona testing said:
“We’ve signed significant deals over the winter. The world is evolving, the world is changing (and) the whole crypto sector is a fascinating one, you’re seeing it more throughout all sports.”
Mercedes then collaborated with the FTX app. In addition, there was a deal concerning Marlboro’s dual F1 and team partnerships that saw the Aston Martin crypto deal that acquired support from a leading crypto exchange platform, Crypto.com. All these companies partnered with significant crypto sector participants as they identified the underlying potential they possess. Even the extreme market conditions could not deter F1 crypto sponsorships from becoming a reality, which is dicey yet commendable.
Formula 1 Teams That Supported The Act
For F1, eight of the 10 teams have been backed by companies of various sectors. Amidst them, Fantom backing has been gained by AlphaTauri. Sauber already has support from Socios.com and has also announced the addition of Floki Inu (FLOKI), meme-frenzy crypto, during the Barcelona pre-test. In addition, Formula 1 cryptocurrency sponsorships also list that Binance has collaborated with Alphine. We earlier also mentioned the FTX Mercedes F1 deal which was another highlight.
Sauber Team Principal Fred Vasseur commented on the integration of F1 crypto sponsorships and said:
“Crypto and decentralised finance are some of the latest markets that have garnered attention in recent years, and they represent a huge potential area to grow business”
F1 And Sustainability
Formula 1 has pledged to achieve net zero carbon emissions by 2030. However, the fact that mining even one Bitcoin (BTC) would consume a higher amount of electricity than an average household does. Therefore, it would be a hindrance to their sustainability goal. To this, Toto Wolff, the Mercedes F1 CEO, responded by explaining that:
“The sustainability argument is extremely important but it is not only about mining and the energy that it consumes, but also where the energy comes from. But you can’t shut yourself down to modern technology. It’s definitely an area that will grow. It was fascinating to understand crypto exchanges. FTX is a crypto exchange, handling billions of transactions every day, so that is something that you cannot stop. You have to do it [the right way] and we are certainly a good sparring partner for them in terms of sustainability targets.”
Therefore, it seems that F1 aims to achieve its target of sustainability by 2030 even after the incorporation of crypto in their work. So, no such problems or issues regarding crypto F1 integration have been identified currently. They also emphasized that though crypto might be draining energy, it doesn’t cause any health damage (comparing it to tobacco).
F1 crypto sponsorships are expected to extend further owing to the tight regulations that have been placed on the tobacco industry and the underlying potential that the crypto space has. The crypto f1 sponsor list has names of prominent crypto exchanges and participants. This suggests that the reach of this volatile domain has stretched into areas that were never predicted. So, we can surely say that the hidden potential of the digital currency domain has been harnessed by this move.
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