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Are NFTs Bad For The Environment?

Nowadays, there are a number of studies related to Web3 sustainability. The key insight is that cryptocurrency, in particular the process of crypto mining, causes harmful effects on the environment because of high energy consumption and heating. But is that true for non-fungible tokens (NFTs), which are increasingly gaining popularity today? Let’s find it out.

NFT Carbon Footprint

Most of the NFTs are literally just digital images on the internet, so in what way can they be harmful? As it turns out, minting (the process of creation) and storing NFTs in crypto wallet requires a lot of computation power, resulting in higher carbon emissions.

According to a study by EcoExperts, the average NFT generates 211 kg of CO2, which is 5 times as much as a 100 mile driving, and 92 times as much as creating a piece of physical art:

  • Driving a car for 100 miles: 40 kg of CO2;
  • Creating a physical artwork: 2.3 kg of CO2.

In fact, the sale of a single NFT is equivalent to the emissions produced during driving half of the length of an average European country. But this fact usually remains unnoticed.

Where Do NFT Emissions Come From?

The amount of an NFT’s carbon emissions comes down to the amount of energy it takes to power the whole process: from creation to sale on the marketplace. That is not just your computers’ energy consumption. We should also count the energy that powers up a blockchain network with multiple nodes required to mint your NFT and confirm transactions, an NFT marketplace to sell your NFT, and the computer of a crypto user who is buying your NFT.

Joanie Lemercier, a French artist whose work is deeply tied to climate activism, canceled his submission of six works after calculating how much energy it would take to sell them. According to his calculations, the NFT sale would use enough electricity to power Lemercier’s entire studio for two years in just ten seconds.

Although these numbers look scary, the logic of NFT energy consumption is more complicated than it may seem, and hides into blockchain algorithms.

Proof of Work vs Proof of Stake

Proof of Work (PoW) and Proof of Stake (PoS) are the two most popular blockchain consensus tools utilized in Web3 to validate transactions and actions within a cryptocurrency system. And they have a significant difference in energy consumption.

PoW is based on mining, the process of finding new blocks in the blockchain in order to get paid by the system with cryptocurrency. This algorithm requires energy-intensive computers which would be constantly guessing the combination to a digital lock of a block. PoW only allows miners to validate transactions and earn rewards if they own a large enough percentage of the network’s computational power, encouraging people to use more energy to gain more power.

In PoS, blockchain validators (people responsible for verifying transactions) own a percentage of the blockchain network which is equal to their stake — the amount of their cryptocurrency put into circulation to help the system work. The algorithm periodically rewards one of the validators with the privilege to create the next block in the blockchain.

Most major cryptocurrencies, such as Bitcoin and Ethereum, are built on a proof-of-work algorithm, which consumes far more energy than a PoS system. The annual electricity consumption by Bitcoin accounts for an estimated 0.6% of global energy usage.

What Can We Do?

The most obvious way to make the NFT industry more eco-friendly and reduce NFT’s large carbon footprint is a massive switch from PoW to PoS system. There are a number of successfully performing PoS networks which use far less energy, and are suitable for creating and storing NFTs.

For example, Tezos, a popular PoS blockchain platform, consumes only 0.00006 TWh of energy annually, while the Ethereum network requires 33.57 TWh of electricity each year to work. Having realized this, in 2022 Ethereum announced an ambitious plan to shift to a PoS system in order to cut down emissions by almost 99%. However, this attempt may take a lot of time.

All in all, switching to greener solutions will not only make NFT art sustainable and safe for the planet, but also allow NFT artists to save money spent on paying for utilities, and increase users’ trust.

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