Crypto and NFTs: The Latest Sponsorship Phenomenon at Formula 1

Photo: Boardroom

TechSpace - Today, when the world has entered the web 3.0 phase, we are certainly no stranger to hearing terms such as start-ups, blockchains, and crypto. The cryptocurrency community has always emphasized decentralization and globalization. Therefore, it is unsurprising that several crypto companies sponsor Formula 1 (F1) racing teams to better connect with audiences worldwide. The phenomenon of NFT and cryptocurrency now seems to be a new trend in Formula 1 as sponsors of many F1 teams.

Research by global analytics firm Nielsen Sports found that Formula 1 has the potential to reach an estimated one billion fans globally this year, with the 16–35 age group making up the bulk. That age range is considered the more tech-savvy age and is labeled an "early adapter." Therefore, the appeal of F1 is increasing and making cryptocurrency companies want to jump in to show their presence. In 2022, 8 out of 10 F1 teams will be sponsored by crypto brands. Only the Williams and Haas teams have not yet enjoyed sponsorship money from crypto brands.

Read also: [Concept] Soulbound Tokens: What is the difference between NFTs?

The value of the sponsorship money that cryptocurrency companies spend on many of these F1 teams is no joke. For example, the Aston Martin team has a deal with Crypto.com with a value of 100 million dollars over five years. In other words, Aston Martin gets sponsorship money of $20 million per year from crypto companies. Before this, the cryptocurrency exchange Crypto.com announced a $100 million partnership with Formula 1 for its 2021 "Sprint Series." For a more fantastic example, the F1 world champion team in 2021, Red Bull Racing, recently entered into a three-year partnership with Singapore-based crypto trading platform Bybit for $50 million per year on a 3-year contract. Bybit claims its sponsorship fund is the world's most expensive crypto sponsorship.

Apart from these two teams, other F1 teams have also signed sponsorship contracts with various crypto brands. Scuderia Ferrari deals with Blockchain company Velas in 2021. Mercedes deals with American crypto company FTX. McLaren deals with OKX and Tezos, Sauber (racing as Alfa Romeo) with Floki, Alpine with Binance, and Alpha Tauri with Fantom.

Picture: Motorsport.com

However, the advent of nonfungible tokens (NFTs) is opening up new prospects for organizations connected with Formula 1. Crypto companies may have first been interested in F1 sponsorships from a marketing perspective. For instance, recent research by Deloitte Global predicted that sports NFTs would produce more than $2 billion in transactions in 2022 alone — more than quadruple the amount observed in 2021. Additionally, according to the survey, five million sports enthusiasts worldwide will own an NFT sports collectible by the end of this year. As a result, most cryptocurrency and blockchain businesses supporting Formula 1 racing teams have also introduced NFTs simultaneously as sponsorships.

F1 legitimizes the existence of NFT by making the F1 Delta Time game. F1 Delta Time is the official game from Animoca Games. F1 Delta Time is based upon the Ethereum currency, which players could convert into Animoca's REVV utility token to let them buy and trade NFT-based in-game items, such as cars, drivers, etc. Most notably, the 1-1-1, a jewel-encrusted automobile, sold for an Ethereum value of nearly $100,000, marking the largest-value sale of an NFT in 2019.


1-1-1 - F1® Delta Time. Picture: OpenSea

Apart from that, some racers have also signed personal contracts with various crypto companies. Fantom announced sponsorship deals with Brazilian-American Formula 1 drivers Pietro and Enzo Fittipaldi on March 22, 2022. Both drivers, according to Kong, will wear the Fantom logo on their racing outfits and helmets throughout the 2022 F1 season. The Fittipaldi Brothers will debut the first NFT series. Those on the Fantom network, in addition to sponsorship arrangements. 

Virtual World champions 2021 NFT" created by artist Rich. Picture: Infinity NFT

Would such a sponsorship arrangement not be in line with F1's pledge to achieve net-zero carbon emissions by 2030 and the enormous energy requirements of cryptocurrency mining, where "mining" one Bitcoin uses more energy than the typical household uses in three months? It would be fascinating to follow this further. 

(AKS)

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