The Rise and Fall of Crypto in F1: What Happened and What Can We Learn?

Since the FTX crash, Formula One teams have been dropping their crypto sponsorships like flies, but how did crypto enter the pinnacle of motorsport to begin with?

F1 drivers at the Miami GP racing under the 'crypto.com' logo (image by FIA).

In the world of F1, dodgy dealings are not unheard of. The sponsorship scandal in 2019 with Haas F1 Team and Rich Energy is one of the most recent that comes to mind, with Rich Energy claiming to be worth millions but fans were unable to find the energy drink on shelves anywhere. Now, the world of cryptocurrency has made its way into F1 through sponsorships and fans are beginning to question its legitimacy.

If you watched any F1 race last year you will have been very aware of crypto’s presence within the sport. The industry’s most established names such as Bybit, Crypto.com, and the now bankrupt FTX, were plastered all over viewers televisions. Even Mercedes-AMG Petronas, seven-time World Constructors’ Champions, had logos on their cars, uniforms, and merchandise.

Despite the currency’s surge in popularity for the 2022 Formula One season, the 2023 season has seen a sharp decline in this online currency, with Crypto sponsorships dropping by 60%.

Lewis Hamilton, Mercedes-AMG Petronas driver, sporting the FTX logo (Image courtesy of Mercedes).

But how did this internet supergiant enter the world of Formula One? And why?

Crypto began to skyrocket with the increase of Bitcoin and Ethereum, with both enjoying a market value within the hundreds of billions. However, the crypto market lacked the rules and regulations to stop anyone from creating their own currency, leading to a lot of scammers and currencies with a short life span.

As the world of Crypto grew and more people started to invest into it – the most infamous name being Elon Musk - the worldwide reach of companies within the industry grew dramatically. Now, all it needed was to legitimise itself, and what better way than through sport?

Vincenzo Landino, an Italian-American sports businessman, explains, “Crypto seem to pull money out of wherever and they sponsor everything and anything – especially sports. And if you’re a big F1 team looking for sponsorships, it’s hard to say no to the big bucks.”

Soon after, Crypto began to pop up in a number of sporting worlds, from football to basketball, covering all continents. The industry had managed to get its foot into the sporting world and its logos seen by millions of eyes.

Netflix’s ‘Drive to Survive’ series that follows drivers and teams throughout each Formula One season, had fans’ screens covered from top to bottom with Crypto.com logos, as the company was seen to be sponsoring all three Sprint races during the 2022 season. Even while millions watched Max Verstappen, Red Bull’s World Champion driver, struggle to gain DRS at the Spanish GP, it would have been the Bybit logo on the car viewers were watching. McLaren’s own driver Daniel Riccardo was even seen to be dressed as a magician by OKX for promotional purposes.

Red Bull Racing proudly displaying the Bybit logo (Image courtesy of Red Bull Racing).

However, tune into a race during the 2023 season, and you’ll find much less crypto sponsorship logo’s staring you in the face. While nearly all teams had a crypto currency sponsorship during the ’22 season, crypto sponsors have dropped a staggering 60% for this season.

“Formula One has become very popular, and with that popularity comes plenty of other sponsorships – ‘safer’ sponsorships – such as American tech,” explains Vincenzo Landino.

“A lot of country’s have gambling laws in place against crypto currency, and so teams have to pull the logo’s for some races which costs a lot of money. With other sponsors, like tech, you don’t have to do that which is a big bonus.”

A report by Sports Illustrated has shown the unsteady nature of crypto, with Ferrari’s sponsor ‘Vela’ having dropped from $0.001 to $0.000081. McLaren also saw their sponsor ‘Tezos drop from $45 to $12.

“With the downfall of FTX and other crypto-centric type sponsorships, a lot of those partnerships were pulled from the sport because of the volatility, the perception of misleading things, and fans thinking they could make a quick buck from crypto.” Explains Vincenzo.

While the Formula One teams may have lost out on large amounts of sponsorship cash from this ‘crypto Winter’, it is also the fans that were encouraged to invest and trade crypto currency that are suffering. F1 teams brought a sense of validation and respect to crypto, leaving fans left to believe it would be a safe investment.

However, savings were lost, houses lost, and livelihoods shattered. Just like any other financial crash, it is the everyday people that believed in something that suffer, not those who created it.

Formula One teams are well aware of their impact and influence having their name stamped onto a company can be. Is it time they started considering their fans that trust them, instead of only seeing dollar signs?