NFTs began in the digital art world, and now artists, gamers, athletes, celebrities, fashion designers, and more are taking an interest. But NFTs are also using a lot of energy, thanks to the blockchain technology that powers them. This means they’re leaving a big carbon footprint.
What Are NFTs?
NFTs, which can take the form of drawings, music, metaverse real estate or digital versions of oneself, have exploded in popularity, with artists getting millions for their creations and fans flocking to games like Chainers and Bored Apes. But as the community has gathered, so too have critics who point to NFTs as a carbon hog — not because of their physical qualities or cultural value, but because they’re hosted on blockchain platforms that use a method called proof of work that consumes huge amounts of energy.
That said, some artists and critics agree that NFTs have the potential to decentralize the existing Internet, which they say is overly dominated by giant platforms that keep most of the money. Artists like 3LAU, who recently sold a single NFT to a superfan, can sell the item and still make more than they’d get from years of Spotify streams.
In addition, NFTs often generate royalties for their creators — who set the percentage when they “mint” the item. These payments are automatically transferred to the creator when the NFT is resold in the secondary market, and can be used to pay for things like server costs, maintenance and marketing. So far, that’s the only way to pay for these royalties.
What is the Environmental Impact of NFTs?
As NFTs have become more mainstream, many artists and collectors are raising concerns about their impact on the environment. The issue mainly centers on the energy required to mine them and verify their existence on the blockchain, a decentralized network of computers that verifies transactions and creates crypto currency.
The process of mining is energy intensive and uses a lot of electricity, which leaves behind a significant carbon footprint. For example, it is estimated that a single Ethereum transaction requires the same amount of energy to send as the average European’s consumption over two months.
Moreover, the verification process (known as mining) leaves a substantial footprint on the environment because of its proof-of-work system. As a result, miners spend a lot of money on powering their computers to solve complex math problems that can verify blockchain transactions.
Those mining efforts may also contribute to rising global temperatures, thus contributing to climate change. Fortunately, some companies are developing solutions to reduce the energy consumption needed to mint and verify NFTs. One such company, for instance, is turning oil waste into renewable energy to power the servers that mine crypto. Whether this is enough to offset the energy cost of NFTs remains to be seen. Until then, it’s a good idea to invest only in marketplaces that use green energy or otherwise make their own environmental commitments.
Advantages of NFTs
While it’s impossible to know exactly how much carbon footprint NFTs have, one thing we do know is that they’re more energy-intensive than other transactions. That’s because NFTs often include smart contracts, which require a lot of computing power to run. And those calculations are often powered by energy that comes from sources that emit greenhouse gases.
So NFTs leave a bigger environmental footprint than a typical transaction, especially if you’re buying or selling high-value assets like the tokenized first tweet of Twitter CEO Jack Dorsey. And a single NFT transaction on the Ethereum blockchain is estimated to use up to 35 kilowatt-hours, which is more than enough to power an average European household for two weeks.
However, NFTs have some advantages that may offset these drawbacks. For example, NFTs are indivisible, meaning that you can’t break an NFT into smaller pieces. This could be useful for artists, musicians and video game streamers who want to sell their work to fans directly without having to give up a percentage of sales to giant platforms. This could also help decentralize the internet by allowing creators to keep more money for themselves. And NFTs are secure because their data is recorded and timestamped on the blockchain, making it impossible to tamper with or forge them.
