On October 20, Andretti Autosport announced its next sponsor for the upcoming Formula E season: Avalanche, a cryptocurrency blockchain platform designed to capitalize on the latest fad in digital currency. And that flies in the face of any green ethic that Formula E claims to be based on.
If you’re unfamiliar with crypto – or just don’t understand what it is exactly – I’ll try to break it down in layman’s terms. Essentially, crypto is the name for a kind of digital currency that can be exchanged for goods and services, but does not exist in physical form. It’s a bit like arcade tokens; you couldn’t use them to pay for your groceries, but crypto has its uses in very specific markets for very specific commodities.
Crypto uses a technology called blockchain, or decentralized technology spread across tons of computers to handle transactions securely. People love crypto because it kills banks, can theoretically reduce inflation, and can provide a more anonymous form of payment than a credit card.
However, to create more of these crypto tokens, a process called “mining” is required. Basically, you are setting up a computer to solve a very complex math problem; resolving it gives you a token and the process starts over. It’s a pain in the ass and takes a lot of effort, but the payoff can be huge. It’s like the gold rush, but on computers.
Mining, however, is bad for the environment. The complex calculations that computers need to perform consume tons of energy, often in the form of electricity – and the cleanliness of electricity depends on how it is derived. In China, for example, most of the electricity is produced by coal, so with over 65% of crypto mining in China, you also generate a lot of additional fossil fuel use and waste. It also generates a lot of electronic waste – the name given to electronic products that have reached the end of their life – as miners must constantly upgrade their technology to stay competitive in the crypto world.
To put it simply, cryptocurrency is the kind of unnecessary activity FE would normally condemn. Andretti Autosport wholeheartedly embracing a crypto sponsor is exactly the kind of move that undermines everything the series – and its teams – endorse.
There are also concerns about NFTs, or non-fungible tokens, which are digital assets like art that have value and exclusivity but do not have a tangible existence. These too are part of a blockchain and are sometimes referred to as “crypto art”, meaning that NFTs can create a similar carbon footprint like something like a bitcoin token.
And Formula E also buys NFTs. He even released a game called “High tension», A blockchain-style motorsport management game that rewards players with NFTs. Again, this undermines Formula E’s efforts to encourage viewers to make choices that benefit the environment.
Andretti argues that Avalanche is cheap and eco-friendly, so he avoids all the criticisms that would normally accompany a crypto platform – but there isn’t a lot of data on how, exactly, this is. supposed to happen.
Formula E isn’t the only series to have a crypto problem. Formula 1, which has benefited greatly from its recent push to become more respectful of nature, has also adopted crypto sponsors. F1 signed Crypto.com as series sponsor and sponsor of the Aston Martin team while Mercedes signed the FTX Crypto Exchange Program.