On the Climate Impact of NFTs

With the huge innovation boom in the use of Non-Fungible Tokens (NFTs) to mint art, music, gaming and collectables tokens on the Ethereum blockchain, concerns have been raised around the carbon emissions associated with these tokens.

Ethereum glyph glowing inside the Louvre pyramid, Paris France.

Blockchain for Climate Foundation has built an NFT-based platform to operationalize carbon markets under the Paris Agreement, currently in beta on Ethereum’s Rinkeby testnet. It occurred that we might be in a good position to shed some light on the topic of NFT carbon footprints, and perhaps help concerned folks in making decisions about the space. This post is a preliminary take, and will form the conceptual framework for a larger report we’re now building out. If you’ve got any technical comments, corrections or clarifications, please let us know!

1) Yes, if you’re engaging with Ethereum and other “Proof of Work” blockchains, you’re legitimately responsible for your portion of the network’s emissions. Your NFT has a carbon footprint.

2) What is less certain is how much your adding/buying an NFT actually leads to -increased- emissions, or whether it simply displaces other transactions on the network. For example, if Bob and Jane are going headed across town and Bob gets the last seat on the bus, does Jane now have to wait for the next bus (causing no additional emissions), or does the transit authority send a whole new bus (causing new, added emissions.)

2a) If “Jane” gets a whole new bus -analogous to new NFT demand on the blockchain upping energy burn — then yes, minting NFTs causes new emissions. If she just has to wait for next bus, analogous to transactions simply being bumped to next open block, or the increased gas cost causing demand destruction and scaring other prospective users away, she isn’t responsible for any new emissions. The bus would have run anyway, just like the Ethereum blockchain would have kept closing blocks and using electricity anyway.

2b) From the carbon footprint point of view, in either case, Bob & Jane are responsible for some bus/blockchain emissions. A moral conundrum concerned folks are facing is whether Jane, a new NFT user, is causing new emissions or not. Blockchain for Climate Foundation is exploring if and how much the growth in NFT use is increasing carbon emissions. As one might imagine, the answer looks complicated.

3. From here, we propose a fairly standard climate assessment approach: a) quantify the emissions, b) reduce emissions where possible and c) offset the rest.

3a) There is existing data that quantifies emissions from whole Ethereum blockchain. Each NFT uses/spends Ether tokens as “gas” to execute a transaction. This “gas” spend correlates to that transaction’s % of the blockchain emissions, and is transparently recorded for each transaction. Assuming we get good whole-Ethereum blockchain emissions data, it’s straightforward to quantify an NFT’s carbon footprint. Of note, the group at Carbon.fyi has built a pretty exciting app to calculate the emissions related to your Ethereum wallet or token contract.

3b) Reducing emissions from NFT use on Ethereum comes from a number of fronts. i) Reducing emissions from whole blockchain and ii) reducing emissions by reducing Ethereum “gas” spend, or % of blockchain use per NFT transaction.

3bi) Ethereum has already begun transition to “Proof of Stake” consensus mechanism that will bring carbon footprint down to negligible levels. Due in a year or two, this will largely solve the issue of #NFT emissions. Great article here: https://ethereum.org/en/eth2/vision/

3bii) Ethereum NFT platform developers can greatly reduce carbon emissions and cost by building systems on “Layer 2.” https://ethereum.org/en/developers/docs/layer-2-scaling This will be near term & major solution for NFTs. Polygon (previously known as Matic) is already being used to generate free and super low carbon NFTs by @TokenizedTweets. There is massive optimism afoot for Optimism “The new scalability stack for Ethereum.” As a bonus, lo-CO2 NFTs are already available at http://nifty.ink on xDAI network!

3c) Offset the rest. NFT user or not, if you are alive, you are causing carbon emissions. High quality offsets from recognized standards like @VerraStandards and @goldstandard reduce carbon emissions elsewhere and are investments in the low carbon future we all want to see.

Carbon offsets invest resources into creating the low-carbon future we all want to see.

Over at Blockchain for Climate Foundation, (in addition to our work putting Paris Agreement on the Ethereum blockchain) we’re digging in to flesh out each of these areas to understand, and clarify paths forward to solve for the carbon emissions from NFTs.