How do NFTs impact climate change?
The connection between climate change and NFTs is mostly due to the blockchain’s current flaws, and fixes look to be a long way off.
Non Fungible Tokens, or NFTs for short, are common in the crypto world. Everyone wants in on the bandwagon, even climate campaigners, but for quite different reasons.
Blockchain, namely Ethereum, is the underlying technology that powers the whole NFT ecosystem. And, like its more renowned offspring, cryptocurrencies, the blockchain’s artistic side consumes a lot of energy. The extent to which digital art has an influence is still being debated.
The Ethereum blockchain is used by marketplaces like SuperRare and OpenSea for transactions and the creation of NFTs. Minting — the act of registering a piece of digital art on the blockchain — is an expensive business. That cost is paradoxically referred to as gas fee, and it is normally paid in Ether.
According to reports, the overall electrical energy usage of the Ethereum ecosystem is similar to the national energy demand of the Netherlands. As the market value of Ether rises and the gas fee rises, the value of transactions on the proof-of-work blockchain rises as well.
However, quantifying the impact of NFTs on a piece-by-piece basis is difficult due to the fact that NFTs account for just a small portion of the global blockchain network.
On the other hand, NFTs are now experiencing accelerated expansion, which implies that their energy consumption and, as a result, environmental effects are increasing faster with each passing day.
According to independent studies, a single NFT piece has a carbon footprint of around 211 kilos, which is similar to flying for two hours, driving a thousand kilometers in a gasoline car, or using a laptop for three years. The energy required for digital art creation is low.
There are a few options for reducing the environmental impact of NFTs. The first is shifting from a proof-of-work blockchain design to a proof-of-stake mechanism for transaction verification.
However, Ethereum is still working on it, and it is likely to happen in the second quarter of 2022. Cardano and Solana, on the other hand, have already embraced the proof-of-stake blockchain mechanism. The move would make Ethereum transactions far less energy-intensive. Another option suggested by experts is to construct a “layer” on top of the existing blockchain. To put it simply, all trading occurs on the second tier of the blockchain, and once a deal is concluded, the parties transfer to the first layer and authenticate the transaction on the blockchain. It is not a foolproof solution to NFTs’ environmental concerns, but it can at least mitigate the damage.
While individuals work out the wrinkles in all of these proposed remedies, the climate situation worsens by the day. People continue to refuse to engage in a system that they believe is intrinsically bad and ecologically damaging, even in the face of very real climate-related tragedies.
Finally, artists are the ones who are most vocal in their advocacy for change. If NFT marketplaces fail to match their expectations, artists may begin minting their NFTs on platforms utilizing cleaner cryptocurrencies. An artist-led movement, is currently underway to gather funds to reward those who can devise innovative techniques to make crypto art more viable.
Anyone who wishes to support such artists by purchasing their work may do so by migrating to less polluting platforms – or just purchasing a tangible copy of their work.