On Oct. 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 it goes against every eco-friendly ethos that Formula E has claimed to be built upon.
If you’re not familiar with crypto — or you just don’t understand what, exactly, it is — I’ll try to break it down in simple terms. Essentially, crypto is the name for a kind of digital currency that can be traded for goods and services but that doesn’t exist in physical form. They’re kind of 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 goods.
Crypto uses a technology called blockchain, or a decentralized technology spread out over tons of computers to manage transactions in a secure way. People like crypto because it cuts out banks, can theoretically reduce inflation, and can provide a more anonymous form of payment than something like a credit card.
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To create more of these crypto tokens, though, requires a process called “mining.” Basically, you set up a computer to solve a very complex mathematical problem; solving it results in you receiving 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, though, is bad for the environment. The complex computations the computers need to perform use up tons of energy, often in the form of electricity — and electricity’s cleanliness all depends on how it’s derived. In China, for example, most power is generated by coal, so with upwards of 65 percent of crypto mining taking place in China, you’re also generating a lot of extra fossil fuel use and waste. It also generates a lot of e-waste — the name given to electronic products that have reached the end of their lives — because miners consistently need to upgrade their technology to stay competitive in the crypto world.
To put it simply, cryptocurrency is the kind of wasteful activity that FE would normally condemn. Andretti Autosport wholeheartedly adopting a crypto sponsor is exactly the kind of move that undermines everything the series — and its teams — endorse.
There are also concerns rising about NFTs, or non-fungible tokens, are pieces of digital assets like art that have value and exclusivity but no tangible existence. They, too, are part of a blockchain, and are sometimes called “crypto art,” which means NFTs can create a similar carbon footprint as something like a bitcoin token.
And Formula E is buying into NFTs, too. It even released a game called “High Voltage,” a blockchain-style motorsport management game that rewards players with NFTs. Again, it undermines Formula E’s efforts to encourage viewers to make choices that benefit the environment.
Andretti is arguing that Avalanche is low-cost and eco-friendly, so it avoids all the criticisms that would normally accompany a crypto platform — but there’s not much data on how, exactly, that’s supposed to happen.
Formula E isn’t the only series with a crypto problem. Formula One, which has made much of its recent push to become more eco-friendly, has also been adopting crypto sponsors. F1 signed Crypto.com as a series sponsor and a sponsor for the Aston Martin team while Mercedes has signed the FTX crypto exchange program.