The art world is becoming increasingly polarized, and many artists struggle to understand the raging debate over NFTs. Some artists presently celebrate NFTs as the turning point of digital arts and an avenue for making money.
However, some condemn these assets because of their numerous negative impacts on the environment. This guide will highlight what NFTs are, how they work, their effects on the environment, and possible solutions to adopt.
What Are NFTs?
NFTs (or Non-Fungible Tokens) are unique, original digital assets and collectibles, typically Ethereum-based cryptocurrency tokens, that prove ownership of digital art such as a meme, GIF, and even tweets. These digital assets hold unique code strings on a digital ledger (or blockchain), but their value usually depends on the current market demands.
The original creators of NFTs invented the token to preserve the originality of a piece of digital artwork due to the ease at which people produce its replicates. In other words, the artist creates a digital certificate for his art. This certificate is what the buyers pay for.
When a buyer purchases this piece of art from the artist, others can still view and copy the actual art in the default file type but cannot access the associated NFT. It is impossible to forge the records of ownership of an NFT since the ledger is stored across thousands of computers worldwide.
NFTs may also contain smart contracts that enable the artists to get a cut of the profit from any future sale of the digital asset.
Every transaction involving an NFT adds a record to the blockchain. In addition, since NFTs are Ethereum-based, the artist receives payment in Ethereum, which they can later cash out or convert to other fiat currencies.
How Much is an NFT Worth?
While NFTs are still relatively new to the art and crypto community, they’re pretty valuable, and their worth varies according to their demand. The recent headlines about multimillion-dollar sales of some digital assets have also fueled interest in them.
For instance, an animated pop-tart cat meme sold for over $500,000 on 19th February 2011. After a few weeks, the musician Grimes decided to sell her digital arts for over $6 million.
Remember that NFTs are not limited to digital arts. For instance, the first-ever tweet from Jack Dorsey, Twitter’s founder, hit a $2.5 million bid after he promoted it as an NFT.
Another digital artist, Beeple, sold his digital art through Christie’s for a whopping $69 million (€50 million) to set a new sales record for the NFT market.
Unfortunately, as valuable as these digital artworks are, there are growing concerns about the environmental impacts of the NFTs.
Environmental Impacts of NFTs
The Digiconomist website established that a single Ethereum transaction uses about 70.32kWh. This amount of electricity can power a household in the US for at least 2.5 days; this implies that these transactions generate a carbon footprint of about 33.4kg of carbon dioxide (CO2). To get a clearer understanding, we can compare this energy consumption to what 74,000 VISA transactions or 5700 hours of YouTube generates.
According to the website, Ethereum transactions leave more carbon footprint than the entire country of Lithuania and consume more energy than Denmark every year. Another article by NFT marketplace, Superrare, affirmed that the carbon emissions from Ethereum transactions are a function of the price, not volume.
Note that carbon footprints are the estimates of the overall carbon emissions resulting from a product’s creation and consumption.
Although there are no exact measures of the amount of carbon footprints NFTs generate, programmer and digital artist, Memo Akten, estimated that an average NFT transaction could produce about 48kg of carbon dioxide. Keep in mind that there are always carbon emissions for each process of selling, purchasing, bidding, minting, and or mining of NFTs.
Several efforts to determine the actual electricity consumption and CO2 emissions have proved abortive over the past years. For instance, Joanie Lemercier, another digital artist, sold six pieces of his digital art in less than 10 seconds on Nifty Gateway. Being an eco-conscious person, he demanded to know the amount of energy and CO2 emissions that the transaction generated. Still, he didn’t get any response from the auction house.
Lemercier later found out that the sale of his cryptoarts used up more energy in 10 seconds than the entire studio used over the past two years. In another effort to track the energy use and environmental impacts of NFTs, some other eco-conscious researchers created a website (cryptoart.wtf). However, the website failed to fulfill its purpose because many people hijacked the platform to abuse and harass NFT users.
Why Should We Be Worried About the Environmental Impacts of NFTs?
As we have seen, blockchain technology, which forms the basis for cryptocurrencies like Ethereum and Bitcoin, produces enormous greenhouse gases, particularly carbon dioxide. Greenhouse gases absorb the heat energy from the sun and prevent it from radiating back into space. This process, also called the greenhouse effect, helps to maintain the earth’s temperature at about 33OC warmer than it would have been otherwise.
However, the increased generation of CO2, a greenhouse gas resulting from human activities such as NFT transactions, contributes to several climate changes, including global warming.
Several artists have also talked about the unique cost of cryptoarts on the environment. The exact amount that the blockchain uses for minting artworks varies. However, it ranges from weeks to months, and sometimes years of the energy use of an average US or EU citizen.
Curbing the Environmental Impact of NFTs
The current environmental impacts of cryptoart and cryptocurrencies are pretty enormous and real. While it is possible to reduce the energy cost that the crypto transactions generate, the crypto market still depends on the value system that relates worth to expended physical resources.
The revolution and prospects of the crypto market should not be at the environment’s expense. Here are some of the solutions we’d like to propose to reduce the environmental impact of NFTs:
- Blockchain technologies should substitute proof of stake (POS) algorithm for the regular proof-of-work (POW). POW uses more energy than POS. Since NFT marketplaces run on the Ethereum blockchain, gradually moving to the POS algorithm, we should be experiencing some improvements soon.
- It is possible to reduce the environmental impacts of NFTs by using cleaner energy sources or planting trees to counterbalance their carbon footprint. This method will be more productive if more Ethereum miners agree to get on board with it.
NFTs’ popularity is growing exponentially, mainly because of their value. However, most NFT artists and buyers are not conscious of the considerable energy and other negative environmental impacts that the transactions generate.
However, the possibility of adopting cleaner energy suggests that blockchain technologies can significantly reduce energy consumption and save the environment.