The Environmental Impact Behind NFTs

By Suhani Agrawal

NFTs have explosively gained popularity within the last years, which in some ways is unsurprising, given the craze around bitcoin and cryptocurrencies. However, the two have a definitive distinction: NFTs are unique and cannot be exchanged or traded for another, whilst a bitcoin can and is essentially homogeneous. NFTs, or non-fungible tokens, let you trade digital tokens linked to digital files, ranging from artwork to GIFS to videos, and even tweets. These tokens are collectictibles, similar to procuring a rare oil painting, but are created instead via transactions on blockchains like Ethereum Each time an NFT is created or sold, a new transaction is put into motion, each of which can require lots of energy As such, given the recent COP26 summit in Scotland which put the spotlight on reducing carbon emissions, the snowballing NFT craze has been attracting attention for the wrong reasons: because of its hunger for energy.

The fact that cryptocurrencies have high emissions is quite well-known. Yet, while a single Ethereum transaction has a carbon footprint of 33.4 kg of CO2, an NFT transaction requires an even larger 48 kg. (Earth.org, 2021). Since an NFT may have more than several transactions including minting, bidding, sales and ownership transfer, it is possible for a single NFT to have hundreds of kgs worth of carbon emissions. Space Cat, for example, an infamous NFT of a cat in a rocket heading to the moon, has a footprint equivalent to an EU resident’s electricity usage for two months (The Verge, 2021). Given the emissions associated with NFTs, a digital market like SuperRare, one of hundreds of such platforms, with its 18000+ NFTs, would be responsible for 3.8 metric tonnes of CO2.

The main reason NFTs consume such high levels of energy is the proof-of-work verification system underlying their transactions, which help secure the blockchains upon which they are traded, and which help define each token’s uniqueness. A potential solution, then, might yet be found in a new verification system being developed, proof-ofstake, which requires significantly less power usage than proof-of-work. Proof of stake requires buyers to lock down their own cryptocurrency tokens, which in so doing helps secure the blockchains supporting NFTs, and which they would lose if they did anything out of line This not only helps the environment but also cleans up the questionable and dubious aspects of the NFT market, such as fraudulent trades and stolen art Moreover, ETH2 0, a new version of the Ethereum blockchain, plans to reduce the costs and ecological impact of the ethereum blockchain as a whole. This would not be the first time someone has tried to revolutionise the world of NFTs in order to make it more environmentally friendly. Memo Akten once developed a website, cryptoart.wtf, which allowed you to view the estimated greenhouse emissions associated with an individual NFT before buying it. However, it was soon shut down since it triggered harassment towards already struggling artists and digital creators.

These past years have proved that NFTs are the future, and that there is no putting the brakes on them. However, making active efforts to make them more sustainable is essential in order to continue buying your favourite GIFs without also buying a rich legacy of greenhouse emissions. Through creating cleaner trading platforms and polishing up blockchains such as Ethereum, this could soon be achieved, and would be to the benefit of artists and buyers both

References:

Qiu, J (2021) What Are NFTs, And What is Their Environmental Impact? [online] Earth org Available at: https://earth org/nftsenvironmental-impact/.

Calma, J. (2021). The climate controversy swirling around NFTs. [online] The Verge. Available at: https://www.theverge.com/2021/3/15/22328203/nft-cryptoart-ethereum-blockchain-climate-change.

The Independent. (2021). How bad are NFTs for the environment? [online] Available at: https://www.independent.co.uk/climatechange/sustainable-living/nft-environment-climate-change-crypto-b1835220.html.

Bruner, R. (2021). Are Environmentally-Friendly NFTs Possible? [online] Time. Available at: https://time.com/6120237/nftsenvironmental-impact/.

Barber, G. (2021). NFTs Are Hot. So Is Their Effect on the Earth’s Climate. [online] Wired. Available at: https://www.wired.com/story/nftshot-effect-earth-climate/