NFTs Hurt the Environment. Here’s Why That Might Change.


Blockchain technology has undoubtedly revolutionized the world, with new use cases for the technology being found daily. One of these is NFTs, a new way to create digital art that took the industry by storm, with some NFTs being sold for millions of dollars each.

The NFT craze peaked when a single NFT was sold for $69.3 million through Christie’s in March 2021. However, digital artists are questioning the sustainability and environmental impact of NFTs.

Why? Because of the energy cost and carbon footprint associated with validating blockchain transactions, or mining, a technology, and process, upon which they rely.

What Are NFTs?

abstract painting

NFTs, or non-fungible-tokens, are a new way to mint digital crypto art through blockchain technology. Or, at the very least, that is the most popular use case for non-fungible-tokens; NFTs can be used to represent a wide variety of assets, be it digital or physical.

NFTs are commonly used to represent digital files such as photos, videos, audio, etc., but they are also ideal to digitally represent physical assets like real estate and physical works of art. And that is all an NFT really does in very practical terms: it digitally represents something else.

So, what are NFTs exactly?

NFTs are cryptographic assets stored on a blockchain, each with an identification code and metadata that make each NFT unique and distinguishable from one another. This might sound a bit complicated but, simply put, NFTs really just are digital certificates of authenticity.

How Do NFTs Work?

NFTs are minted by storing their data (ID code and metadata) into a blockchain, which is then used to verify their authenticity and as a simple way to trade them. The key to understanding how NFTs work lies within their name; they are “non-fungible tokens,” and their non-fungibility makes this kind of crypto tokens so special.

Unlike other crypto tokens, such as cryptocurrencies, NFTs are unique, each representing a unique asset that is not interchangeable for any other NFT.

Related: How to Make an NFT, Then Sell It Online

For instance, in the case of Bitcoin, a single unit of bitcoin is exactly the same as any other unit of bitcoin; the same happens in the case of Ethereum, where one ether is the same as any other ether. However, the same does not apply to NFTs since they represent each unique asset, and their value is derived from the specific asset each represents.

How Did NFTs Become a Thing?

bag of money and crypto coins spread over table

The public first came into contact with NFTs back in 2017, with the success of CryptoKitties. Some CryptoKitties were sold for over $100,000 each. Several big players followed soon after, such as Nike’s CryptoKicks in 2019, which verified the authenticity of physical sneakers while giving a digital version to customers, and NBA TopShot in 2020, a project that sells tokenized NBA highlights collectibles.

In 2021, the NFT market exploded, with artists around the world moving into the crypto art market and selling NFTs for thousands, and even millions, of dollars.

Related: The Most Expensive NFTs⁠—And Why They Cost So Much

How Do NFTs Contribute to Climate Issues?

electric towers over polluted landscape

As more artists and projects hop on the NFT wagon, trying to reap the benefits of their rapidly growing market, other artists and environmental activists worry about NFT’s environmental impact. Their main concern is that increased NFT minting and trading will contribute exponentially to the large carbon footprint and high energy consumption already associated with blockchains, the technology it relies on.

Related: The Top Things to Check Before Buying an NFT

This has led some artists, including former crypto artists and environmental activists, to deem crypto art as environmentally unethical. One of the first artists and environmental activists to bring the case forward was Memo Akten. The artist launched a website in December 2020 that analyzed NFTs and traced their carbon footprint.

The site used to let people check the carbon footprint associated with individual NFTs until it was taken down by Akten himself. After analyzing 18,000 NFTs, Akten found that the average NFT has a carbon footprint equivalent to over a month’s worth of electricity for someone living in the EU.

NFT Computational Costs

black and red computer

The main reason behind NFT’s carbon footprint is that most of them are minted and stored on the Ethereum blockchain, which currently uses the Proof-of-Work consensus protocol for verifying its transaction blocks. The core issue with Proof-of-Work blockchains is that they demand a lot of computational power to validate transactions, which translates into the need for nodes, or miners, to employ highly energy-consuming specialized hardware.

Growing Demand

The second reason is the speed at which the NFT market is growing. 2021 witnessed an explosion in NFT markets, with August 2021 breaking records with over $5.2 billion in NFT trading volume. 2021’s NFT trading volume already amounts to a 38,060% increase year-over-year, though admittedly from a very low starting point.

These numbers are, of course, impressive, and they fill a lot of crypto artists and art collectors with enthusiasm. However, environmentalists worry that larger trade volumes also mean an exponentially larger carbon footprint associated with NFT minting and trading.

Sustainable Alternatives to NFT Minting

hands holding a small plant

The carbon footprint associated with blockchains has been a major issue for the widespread adoption of cryptocurrencies since their inception, which hasn’t changed with NFTs. However, this is something on which people are already working, and there is at least one proposed solution likely to be the path forward to a sustainable blockchain and NFT market: Proof-of-Stake.

Read More: Proof-of-Work vs. Proof-of-Stake: Cryptocurrency Algorithms Explained

There already are some Proof-of-Stake blockchains that run NFTs, such as IOS.IO, Algorand, or Cardano. In addition, several NFT marketplaces already run on some of these blockchains. Even Ethereum has started implementing its Ethereum 2.0 upgrade, which includes a transition to a Proof-of-Stake consensus mechanism.

“Phase 0” of the Ethereum 2.0 deployment was launched in December 2020, with the creation of the Beacon Chain, Ethereum’s very own Proof-of-Stake blockchain. It is expected that “Phase 1” will begin sometime in 2022, merging the Beacon Chain with the current Ethereum network, thus transitioning into Proof-of-Stake.

NFTs Need Proof-of-Stake to Reduce Energy Cost

NFTs are the latest use case for blockchain technology to storm the world. These digital certificates of authenticity proved to be not only lucrative but to have many practical uses too. However, as the NFT market continues to grow at such an astonishing pace, some think NFT’s large carbon footprint makes trading NFTs ecologically unethical.

However, there are several initiatives already for cleaner NFTs by minting and trading them through Proof-of-Stake blockchains. In fact, even large blockchains, such as Ethereum, are moving towards Proof-of-Stake. Hopefully, in the near future, all blockchains will do the same.

nft graphic

The 5 Biggest NFT Projects Out There Right Now Are Making Millions—But Why?

These super expensive JPEGs are earning owners millions of dollars, but how can a digital image be worth so much money?

About The Author

Products You May Like

Articles You May Like

Samsung Galaxy M33 5G Production Begins in India, Launch Imminent: Report
How Intel is Handling the Global Chip Shortage, Arc GPUs for PC Builders, and More: Interview with Gregory Bryant
हिंदी 100 मार्क्स बिहार बोर्ड | Hindi 100 Marks Subjective Question Answer | Education Baba
10 Travel Photography Ideas to Get You Inspired
Realme 9i India Launch Date Confirmed for January 18; Price Leaks Online

Leave a Reply

Your email address will not be published. Required fields are marked *