For most of the time, drywall is not a bad material to use when you want to cover basement walls and surrounding surfaces. Nonetheless, it could take a lot of time and effort to apply the material correctly, especially at the finishing stage. In fact, sanding drywall mud is easily one of the most problematic house remodeling tasks because of the dusty cloud it creates. The material is pretty inflexible as well so you would have a hard time adding an outlet or fixing a pipe. After some time in use, moisture could get through the outer layer of the drywall and steadily degrade its quality. At worst, the place would become an ideal breeding ground for exceptionally harmful fungus like mold and mildew.