NFTs are rapidly transforming the digital art space. They have gone from CryptoKitties to actual fine art pieces. It has all been possible because of Blockchain technology that allows artists to create unique, verifiable NFTs. Recently, The Merge NFT sold for $91.8 million. As crazy as it might sound, it is true. However, this art does not only cost money – our climate pays a cost too. Most artists are not aware of this aspect of blockchains. In this article, we will discuss NFT environmental impact and look at how crypto platforms are working to make it climate-friendly.
Before moving forward, here are two things you should know. According to a Cambridge study, Bitcoin, the largest cryptocurrency and blockchain network, consumes energy equivalent to Argentina. Secondly, Ethereum consumes energy equal to Libya.
However, it is not entirely true that all of this electricity consumption is because of NFTs. A large chunk of the percentage is involved in other cryptocurrency transactions on the blockchains. This energy consumption leaves a trail of a carbon footprint behind it. That is why many crypto artists and climate activists are speaking out against cryptocurrencies and NFT environmental impact.
The people supporting this digital revolution, started by Bitcoin, claim that this is just like plane emissions. No matter how many people are aboard the plane, it will still fly and leave carbon emissions. Similarly, if some people do not adopt blockchain network and NFTs, the digital art market will continue to thrive.
Contrarily, it is believed that the interest in the market will cause increased minting of NFTs. Just like the interest in an airline makes them increase their flights. Still, the only way forward for this system is to make it sustainable for the global environment.
But the real question is, how does mere digital art create an NFT environmental impact that rivals some nations? To answer this, we will have to look at the underlying technology of most blockchains.
We have covered this already in our blog, but here’s a recap. The driving force of this digital revolution is blockchain networks and cryptocurrencies. As you know, they work on a decentralized system. However, there is still a need to verify the transactions on the system without the need for a controlling party. That’s where crypto mining comes in. Whenever a transaction occurs on a blockchain, Bitcoin, Ethereum, etc., the miners solve a complex cryptographic puzzle. Crypto mining requires a massive amount of computing power which in turn requires a massive amount of electricity. And the hard fact is that this power-hungry system is by design. It is called Proof-of-Work (PoW). The developers claim that when mining requires this much computing and electric power, people are not encouraged to use it for wrong purposes.
When an artist mints NFTs on the platforms, the miners ensure the data is verified on the blockchain. And when they sell it, another transaction happens. Thus, initiating the PoW system on each transaction. But the problem is that whenever artists mint, list, sell or buy NFTs, the transactions consume power. And each NFT leaves a carbon footprint larger than a physical art studio. Cryptoart.WTF, now unavailable, was a website that tracked the NFT environmental impact.
This all sounds bleak, but thankfully NFT platforms are slowly but gradually moving towards a more sustainable system.
You might have heard of NBA Top Shot? We have covered it, and it is one of the most popular NFT markets. But an amazing fact about this market is that it is based on the Flow blockchain. This blockchain works on the energy-efficient Proof-of-Stake system.
Unlike PoW, Proof-of-Stake does not require massive computing power to solve complex puzzles. Instead, it keeps a portion of cryptocurrencies of the people as their stake, so they do not perform any invalid transactions. Even Cardano and Solana blockchains have adopted this PoS system.
Major platforms like OpenSea, SuperRare, and Nifty Gateway are based on the Ethereum blockchain. As mentioned, Ethereum and Bitcoin use PoW. On the flip side, the good news is that Ethereum will move towards PoS in the coming years.
Some other crypto platforms, most notably Bitcoin Lightning Network, are using a second layer on top of the blockchain layer. Most transactions occur off-chain on the second layer, so the data is minimized, and only a single transaction occurs on the blockchain. This minimizes the computing power, which consequently minimizes the electricity need. Thus, reducing the NFT environmental impact.
Moreover, some companies are trying to use clean energy to offset the carbon imprint of cryptocurrencies and NFTs.
NFTs have so far proved to be a blessing for digital art creators. But as time progresses, the current system may prove to be more dangerous for the environment, regardless of the crazy money. As discussed, crypto platforms and even artists are adopting cleaner versions to make this revolution sustainable for the planet. But it will only work if the artists and the buyers join hands in this reform. We, as artists and environmentalists, support this change in the crypto space to minimize the NFT environmental impact. There are many other companies as well, who are working to bring cleaner and more efficient solutions to the market. And we are hopeful that as time passes, it will get better.