The Environmental Risk of NFTs
Buzzwords like blockchain, cryptocurrency, and NFT have flooded mainstream media in recent weeks. Some major events driving the hype include the largest cryptocurrency exchange, Coinbase, going public, Dogecoin skyrocketing over 5000% this year, and a digital art piece selling for over $69 million dollars. Blockchain is the decentralized database technology behind cryptocurrencies and NFTs, and it has significantly disrupted virtually every industry, as well as the environment.
NFTs and their footprint
NFT stands for non-fungible token and means something that is unique and cannot be replaced. NFTs differ from cryptocurrencies because they are one of a kind. This allows for virtual assets like art or songs to be monetized and it gives buyers proof of authenticity through a blockchain network.
NFTs have served artists and creators well by broadening their audience and ensuring their work cannot be copied, but many remain concerned over the environmental impact associated with the new trend. Australian architect and artist, Chris Precht, was originally very thrilled to learn that a platform hosting digital collectibles existed. His excitement waned after he researched the environmental footprint of such platforms and found that creating 300 items of original art would have burned through the same amount of electricity that an average European would otherwise use in two decades. Another computational artist calculated that the average Ethereum transaction has a footprint of about 20kg Co2 equivalent. The reason why these virtual transactions are so devastating to the environment is due to the way a blockchain network operates, namely the carbon footprint associated with their electrical output.
Crypto Mining
Blockchains serve as a public ledger and the blocks are represented by anything from the purchase of a cryptocurrency to the transfer of an NFT. Blocks are added through crypto mining where high-powered computers solve mathematical puzzles. This is where the environmental harm is done. Over 75% of the world’s Bitcoin mining is done in China and scholars argue emissions from this cryptocurrency alone could raise Earth’s temperature by 2 degrees Celsius.
What can you do to be more sustainable?
The environmental threat that blockchain networks pose for climate change is clear, but that does not mean the innovative technology must be boycotted. Solutions have been built to alleviate some of the environmental harm and using more sustainable platforms will be key in limiting the footprint of blockchains. Green initiatives in the space include:
Square enables users to buy and sell cryptocurrency and has pledged net-zero carbon emissions by 2030. The platform also pledged $10 million to its newly launched Bitcoin Clean Energy Investment Initiative.
Bitcoin Zero (BTC0) is a wrapper token that consists of one Bitcoin and has been rendered carbon neutral by retiring 10 tonnes of REDD+ carbon credits in the form of 10 Universal Carbon. This token allows you to still buy and sell Bitcoin with the bonus of net-zero carbon emissions.
Green NFTs is a bounty system for creating more eco-friendly NFTs. The grant raised over $34,000 and some of the money will go to developers creating open-source solutions.
Blockchain is driving advancements across the globe, but the environmental degradation it causes should not go unnoticed. This issue will only worsen as the platforms gain popularity and the technology disrupts more industries. Steps are being taken in the right direction by organizations committed to reducing the environmental impact of blockchain, allowing consumers to be more proactive in their choice of sustainable platform options. At the end of the day, the environmental risks of NFTs showcase the importance of understanding carbon footprinting and how something as trivial as blockchain can have a monumental impact on our climate.
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