NFT Environmental Impact: The Good and the Bad
NFTs have taken the art community by storm, and it’s continuing to make an impact in the digital world.
But the thing is, NFTs don’t just have a hold on the future of the art world, but the REAL WORLD as well.
With NFTs causing so much greenhouse gas emissions, the debate about NFTs and the sustainable future has taken up the stage.
So what’s the huge deal about it?
What Are NFTs?
Before we can talk about the issues surrounding NFTs, we need to understand where this controversy is coming from.
NFTs, AKA non-fungible tokens, are a unique form of cryptocurrency that can be any piece of media that’s digital.
An NFT can be a drawing, a photograph, a GIF, a song, a video game, or even a tweet.
NFT creators can sell their work on NFT platforms for a fee and earn crypto tokens from the sales, which may use energy to make a transaction.
How Do NFTs Work?
NFT creators can sell their digital art using this economic system to sell their creations without selling their ownership.
This is a big deal for digital artists since art posted online can often lead to theft. Crypto art allows artists to profit off their works even when people who bought their art resell it.
At the beginning of the NFT craze, a lot of people were excited about NFTs in general.
Austrian architect Christ Precht said he felt like a “little kid” when learning about crypto art and the NFT marketplace.
French artist Joanie Lemercier felt the same sentiment as well.
His work resonates with climate activism, and he thought that NFTs could reduce his reliance on airplanes when traveling to international art festivals.
Since he wouldn’t need to take airplanes that are known to release a lot of carbon emissions and thus leave a huge carbon footprint, NFTs looked like a GREAT SOLUTION to his dilemma.
You might be thinking, “This isn’t bad at all! Why are people making such a fuss about NFTs?”
Emissions Generated From NFTs
The problem with NFTs is the energy consumption it uses when minting and selling a digital file.
When someone wants to buy an NFT, it has to go through an energy-intensive blockchain technology process called “mining.”
The computers (or miners) will try to solve complex puzzles to get the uniquely identifiable NFT that the buyer wants.
The miner that unlocks the digital lock will get a reward from the required transaction fees.
But even if only one computer was able to solve the problem, the other computers still used up as much electricity as the winning miner.
As cryptocurrency prices inflate, the puzzles become more complex to solve. You will need more machines and cooling units to keep up with the required computing power.
The result? Increased emissions and electricity usage.
When you add up all that energy consumption, the carbon footprint it leaves is HUGE.
The Outcry Against NFTs
The amount of carbon emissions the average NFT makes is around 92.23 kgCO2. That’s about 204,414 VISA transactions for ONE transaction.
Suppose you want to look at it from an electricity consumption perspective.
In that case, it goes up to 194.16 kWh, which is about as much electricity consumed in the average U.S. household over 6.56 days.
When looking at those numbers, people bring up environmental concerns about NFTs and other concerns about their validity.
What Do Other People Think?
People online say that NFTs are part of an inherently problematic economic system that will only cause the climate change issue to worsen even more.
NFT marketplaces like SuperRare, Nifty Gateway, and MakersPlace use the Ethereum Network to conduct their sales.
People have claimed that the Ethereum network requires as much energy usage as the entire country of Libya. Other blockchains are no different.
When mining Bitcoin, the Bitcoin blockchain would use up about 125% of energy in Czechia, which would leave a total of 36.95 million tons of CO2 with regards to its carbon footprint.
Do NFTs Contribute a Lot to Climate Change?
The thing is, NFT transactions only make up a SMALL PORTION of Bitcoin mining and Ethereum transactions.
So even if everyone stopped selling and buying NFTs, the carbon emissions from crypto mining would stay RELATIVELY UNALTERED.
Computers will continue to solve blocks of information to solve problems to keep people’s financial records in the shared digital ledger updated at all times.
That makes the argument that NFTs cause more pollution is more or less null and void, but all the same, the overall carbon footprint of the system it’s under is colossal.
Making NFTs Environmentally Friendly
Even with all the concerns raised about NFTs’ possible impact on the physical world, NFT creators and enthusiasts alike are still looking at NFTs with hope in their eyes.
Individual Artists and Accountability
You might have heard that digital artist Beeple sold the most expensive NFT in the art world called The First 5,000 Days at Christie’s auction.
It was sold for a staggering amount of 69 million USD.
Beeple says that he’ll be making his NFT artwork go CARBON NEGATIVE in the future.
This means he’ll offset emissions that he caused with his NFTs by investing in conservation projects, renewable energy, and technology that will help reduce carbon dioxide.
Beeple and several other artists came together to sell carbon-neutral artwork on Nifty Gateway to raise funds for the Open Earth Foundation.
Each artist and artwork received 60 carbon offsets to reduce the impact their art may make in the Carbon Drop auction.
Platform and Marketplace Efforts Towards Carbon Offsetting
Aside from individual efforts to make NFTs more eco-friendly, NFT tokens and marketplaces are trying to do the same.
Proof of Work
Remember how miners compete with each other to complete a transaction? That system is called PROOF OF WORK.
Proof of Stake was created as an alternative to solve the electricity and energy consumption problem Proof of Work makes.
It works by substituting mining power with STAKING.
That means the person with the most tokens staked for a transaction will do all the computing, which would lessen the need for more energy.
Platforms Using Proof of Work
The Flow blockchain is already using the Proof of Stake system, making it so much more energy-efficient than other blockchains.
That blockchain is powering the NBA Top Shot marketplace, which may relieve environmentally conscious basketball fans out there.
But Ethereum is still the leading platform for NFTs, and its environmental impact is unmistakable in the crypto world.
Because of that, Ethereum announced it would shift from a Proof of Work system to a Proof of Stake system, which would reduce its carbon impact in the mining process.
Ethereum has already introduced this to the leading network as a beacon chain, meaning it’s still not a complete component of their network.
The Proof of Work system of Ethereum will end in around 2022 when they can merge the main network with the beacon chain.
Are the Efforts Enough?
Even with all the effort to combat the amount of energy NFTs and blockchains in general use to make transactions, people still think it’s not enough.
Remember Chris Precht and Joanie Lemercier?
When they both found out about the amount of energy used in minting artwork as NFTs, their feelings about NFTs soured.
Chris Precht revealed on an Instagram post that while researching further about NFTs, he and his wife discovered that selling NFTs would have a NEGATIVE ENVIRONMENTAL IMPACT.
Even then, he still wanted to look into carbon offsetting to reduce the amount of emissions he’d make when selling his work.
His wife told him that he would need to plant FORESTS to offset the carbon footprint he’d create.
So when he calculated the amount of energy needed to mint the three pieces of art he wanted to sell, he found out it would be worth two decades of his electricity consumption.
“This leaves such an ecological guilt for me that, at this time, I have to say no to that,” Pracht said during the video.
Joanie Lemercier was not as fortunate as Pracht. He’d already sold his art when he found out about the amount of energy his art used.
After selling his work, he tried contacting Nifty Giveaway about the amount of CO2 emission and energy consumption his work used.
After the lack of response, he turned to Offsetra and learned that the six pieces of NFT art he dropped “consumed in 10 seconds more electricity than the entire studio over the past two years.
“This lack of transparency basically ruined two years of efforts.” He wrote in a blog post that went viral.
Global warming is a genuine threat to our future with the number of fossil fuels and greenhouse gases we consume in this age.
NFTs are an exciting part of the future for creators, but at the moment, the technology behind them is still new and needs fine-tuning.
The solutions offered to make NFTs more environmentally friendly all work to varying degrees of success, but these solutions aren’t widely adopted at the moment.
The only thing to do now is to wait and see what the future holds for NFTs.