Just as we’re beginning to understand what cryptocurrencies are and how they work, a new crypto relative has surfaced—introducing non-fungible tokens (or NFTs). Regretfully, the impact of NFTs on the environment is not very encouraging. Here’s why:
NFTs Environment Impact
NFTs and cryptocurrencies have one thing in common: they both consume a lot of energy. Bitcoin’s mining already emits 38 million tonnes of CO2 annually, which is more than Slovakia’s entire carbon footprint.
In addition, according to a 2018 study published in Nature Climate Change, Bitcoin emissions alone might elevate Earth’s temperature by two degrees Celsius.
“Bitcoin is a proof-of-work blockchain, which means that it secures the blockchain and verifies transactions using proof-of-work (PoW) consensus procedures.” “PoW implies that miners compete with one another to mine a block,” says Susanne Köhler, a Ph.D. fellow and self-sustaining blockchain technology researcher at Aalborg University in Denmark. “In these contests, advanced computers create trillions of predictions per second in an attempt to win.”
It could be described as a brute-force technique. This is what necessitates a large amount of electricity.” – Source
To put this in context, Bitcoin’s everyday carbon footprint is akin to watching 57,000 hrs of Youtube clips. Furthermore, its daily electricity use is proportionate to the amount of power used by a typical American household over the period of 25 days. NFTs have similar ecological consequences because they require energy-intensive computing transactions to validate and auction the art.
“NFTs necessitate blockchain transactions—to produce NFTs, to bid, to compensate for the NFT after winning the offer, or to transfer ownership,” Köhler explains. “So you may link the share of transactions required by NFTs to their part of electricity usage and ecological footprint.” – Source
The energy consumed in these transactions is also an issue, according to Köhler, because miners are often driven to use inexpensive electricity in order to maximize profits. There’s also the issue of technology: “Production and repurposing of hardware only account for a minor share,” she adds. “However, employing specialized processors for mining, which might become unproductive in a matter of a few years, generates a significant amount of e-waste.”
Is it possible for NFTs to be Sustainable?
While it is evident that NFTs impact on the environment is significant, Köhler believes there are some alternatives for them to be more sustainable in the future. Begin by limiting the impact of the blockchain technology being employed.
“The majority of NFTs run on Ethereum, which is a proof-of-work blockchain.” “Ethereum is shifting from proof-of-work to proof-of-stake in order to protect its blockchain and validate transactions, making NFTs more viable,” she explains. “However, this is not a simple task, and it takes time.” This might also be addressed by using a new (non-PoW) blockchain.”
A second option for NFTs to become more viable is to reduce the number of blockchain transactions required. “This may be accomplished by building on ‘layer 2,’ which means that every transaction does not need to be on the blockchain,” Köhler explains. “For instance, an auction may be conducted totally off-chain on layer two and then published to the blockchain, in chunks.” This is a solution that can be applied in the near future.” – Source
However, in a world where the majority of energy production is still based on fossil resources, skeptics argue that cryptocurrencies and NFTs environment impact will continue to grow, and will continue contributing to global warming if action is not taken.
And we all expect that action to happen sooner than rather than later.
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