Kiera Jefferson
Non-fungible tokens (NFTs) are unique cryptocurrency tokens that can take the form of anything digital, such as art, GIFs, or even a tweet. NFTs have gained popularity as a new model of ownership for digital artists to assert the originality of their work. However, the environmental impact of NFTs has been brought into question. The process of minting and trading NFTs is energy-intensive, and most NFTs are bought and sold with Ethereum, a cryptocurrency that consumes significant amounts of energy and produces greenhouse gas emissions. As the number of NFTs grows, energy consumption and storage space requirements are expected to increase, leading to concerns about their contribution to climate change.
What You'll Learn
Artists are divided over the environmental impact of NFTs
Other artists are concerned about the environmental impact of NFTs but are optimistic about crypto art. They are pushing for change and believe that in the next year or so, the emissions will be a non-issue. If marketplaces for NFTs do not start to meet their demands, artists could start minting their NFTs on marketplaces using cleaner cryptocurrencies. There is already an artist-led effort to raise money to reward people who can figure out new ways to make crypto art more sustainable.
On the other hand, some artists are excited about the financial gains of selling an NFT. An NFT of Twitter CEO Jack Dorsey's first-ever tweet sold for $2.9 million. A digital trading card of an epic LeBron James dunk sold for $208,000. Kings of Leon recently became the first band to release an album as an NFT. Blockchain entrepreneur Vignesh Sundaresan, also known by his pseudonym MetaKovan, showed the digital artwork NFT "Everydays: The First 5,000 Days" by artist Beeple, in his home in Singapore. In March, the programmer bought the world's most expensive NFT for $69.3 million. "As our society generally adopts and moves towards technology, and assimilates technology into every aspect of life, it's only natural for artists, who are commentators on society, to respond and use that medium that's at their fingertips to kind of explain what's happening," Sundaresan said.
The environmental impacts of NFTs are not limited to CryptoArt but apply to all PoW-based NFTs. "NFTs are using blockchain platforms, so you could associate their use of the blockchain with the share of the blockchain's environmental impacts," Susanne Köhler, a blockchain sustainability researcher at Aalborg University in Denmark, told CBS News. "The environmental issue with NFTs isn't the NFTs themselves, but the way the network they are built on is secured," she added.
The controversy surrounding NFTs and their impact on the environment is a complex issue that involves a range of factors, including the energy consumption of blockchain technology, the use of cryptocurrencies, and the potential for carbon offsetting. While some artists are concerned about the environmental impact of NFTs and are advocating for more sustainable practices, others are attracted by the financial gains and the opportunity to reach a broader audience.
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The Ethereum blockchain used to mint NFTs has a high energy consumption
The Ethereum blockchain, which is used to mint most NFTs, has been criticised for its high energy consumption. Ethereum is a cryptocurrency that is used to buy and sell most NFTs. The process of blockchain mining that makes NFTs possible has been criticised as one of the most direct examples of cashing in on the pollution of the planet.
Ethereum's energy consumption has been compared to that of small countries like Bahrain. Digiconomist estimates that a single Ethereum transaction is roughly equivalent to 74,000 Visa transactions in terms of energy consumption. The carbon footprint of an average single-edition NFT is equivalent to driving a car for 1,000 kilometres. For higher editions, the figures are equivalent to dozens of transatlantic flights.
Ethereum's energy consumption is estimated to be around 75 TWh per year, which is a significant portion of the world's electricity consumption. This high energy consumption has led to concerns about the environmental impact of NFTs, especially in the age of accelerating climate change. Artists are divided over whether there can be a more sustainable future for crypto art. Some artists avoid NFTs altogether due to their high carbon footprint, while others are exploring ways to make crypto art more sustainable.
While there is ongoing debate about the exact energy consumption and emissions associated with Ethereum and NFTs, it is clear that the current system has a significant environmental impact. Some alternatives to Ethereum, such as GoChain, have been proposed as more environmentally friendly options. Additionally, there are efforts to create more eco-friendly NFTs, and some artists are investing in renewable energy projects to offset the emissions from their NFTs.
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NFTs are stored on the Interplanetary File System (IPFS)
The InterPlanetary File System (IPFS) is a decentralized peer-to-peer file storage and sharing protocol. It is a network that uses cryptography and is built in relation to the blockchain. IPFS allows for the storage of auditable data without relying on single centralized cloud storage platforms. It is a distributed system for storing and accessing files, websites, applications, and data. It is a public network that is free for everyone.
IPFS is a peer-to-peer distributed system for storing, accessing, and sharing files, websites, applications, and data. It is a global, decentralized network for storing and sharing files. It is designed to establish a fully decentralized system capable of functioning across places as disconnected or as far apart as planets. It is a significant advancement in file storage and retrieval, offering a promising alternative that empowers users with greater control and a more resilient internet experience.
IPFS uses distributed hash tables (DHT) to discover the nodes hosting the matching content. Each piece of content is identified by a unique hash called the IPFS Content Identifier (CID). This means that the content is stored and retrieved based on its hash rather than its location, making it much harder to censor or manipulate.
IPFS is ideal for applications where data storage must be fully transparent and verifiable, but the data is too large to store on the blockchain. It is often used for storing NFTs as primary or secondary storage. It is a reliable way to ensure that the NFT will always be accessible, no matter what.
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The Merge caused a reduction in NFT energy use
The controversy surrounding the environmental impact of NFTs has been a cause for concern, especially in the age of accelerating climate change. NFTs are usually minted on the cryptocurrency Ether, with most NFTs being bought and sold with Ethereum. Ethereum's energy consumption has been a cause for scrutiny, with estimates placing its annual energy usage on par with small countries.
The Merge, which took place in September 2022, changed the cryptocurrency consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This shift has made Ethereum 99% less energy-intensive, addressing the power consumption issues associated with NFTs. PoS limits data authentication to a single computer and its algorithmically assigned validator, rather than the global free-for-all of PoW. This not only reduces energy consumption but also makes the process more efficient.
The environmental impact of NFTs has been a divisive issue within the art community. Some artists avoid NFTs due to their high carbon footprint, while others see the potential for a more sustainable future. The Merge has provided a solution to the energy-intensive process of NFT minting, making it a more viable option for environmentally conscious creators.
While The Merge has significantly reduced the energy consumption associated with NFTs, it is important to note that the issue of energy usage in blockchain and cryptocurrencies remains. The use of excess renewable energy has been proposed to mitigate emissions, but allocating it specifically to NFTs is challenging. Additionally, there are questions about whether NFT transactions are the best use of this excess renewable energy when there are people in need of electricity.
The Merge has undoubtedly improved the energy efficiency of NFTs, reducing the carbon emissions related to Ethereum activity. This shift has addressed the criticism surrounding the high energy consumption of NFTs and has the potential to pave the way for a more sustainable future for crypto art.
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Artists are trying to make NFTs more sustainable
Artists are divided over the environmental impact of NFTs, with some choosing to avoid them due to their high carbon footprint. However, many artists are leading the charge to make NFTs more sustainable. Some artists are actively seeking out more eco-friendly platforms and cryptocurrencies to use for their NFTs. Artists are also working to raise awareness about alternatives to Ethereum, which is known for its high energy consumption.
Artist Damien Hurst recently launched a collection of NFTs on the Palm sidechain, which claims to be 99% more energy-efficient than PoW systems. Artists are also exploring the use of private blockchains, which allow them to sidestep some of the issues with cryptocurrencies. Platforms like Artrade claim to be the first carbon-neutral app to address the issue of NFT carbon impact. It uses Solana blockchain technology, which it claims is significantly more ecologically friendly than the Ethereum network.
Some artists are also choosing to offset the emissions associated with their NFTs by investing in renewable energy, conservation projects, or technology that removes carbon dioxide from the atmosphere. For example, digital artist Mike Winkelmann, also known as Beeple, has pledged to make his artwork carbon "neutral" or "negative". He plans to invest in projects that offset the emissions from his NFTs, such as renewable energy or technology that sucks CO2 out of the atmosphere. Other artists, such as Bronx-based NFT artist Huppings, believe that the environmental impact of Ethereum is negligible compared to large corporations like Amazon.
There is also a growing artist-led effort to raise money to reward people who can figure out new ways to make crypto art more sustainable. Artists are pushing for change and if NFT marketplaces don't start to meet their demands, they may migrate to less polluting platforms.
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Frequently asked questions
Yes, NFTs cause pollution. The blockchain technology that NFTs are built on uses a lot of energy, which often comes from fossil fuels. This results in the emission of greenhouse gases.
NFTs are usually created and sold using blockchain technology, which requires a lot of computing power and energy. The process of "minting" an NFT involves making a blockchain entry, which uses a lot of energy. Additionally, NFTs require storage, which also consumes energy. As the number of NFTs increases, the energy consumption and storage space required also increase.
There are ongoing efforts to reduce the environmental impact of NFTs. Blockchain developers and communities are working on solutions, and some artists are advocating for more sustainable practices. Artists are also exploring alternative blockchain platforms that are more energy-efficient.
