Environmental Impact of NFTs
Environmental concerns have always been around as far as the crypto-currency-based market transactions were concerned. These Digital currencies started trending because they essentially remove the middle-person, which allows buyer and seller to interact directly.
These Digital Currencies or Cryptocurrencies were encrypted, made difficult to mine in order to prevent a few individuals or a group from taking control of them. There is no single point of control, i.e Decentralized.
Mining and Energy use
You might be wondering how energy is used in the mining process. Only miners with the most computational power are likely to solve complex arithmetic problems the fastest, which means miners must run a big number of computers — and consume a lot of electricity. Even though only one miner is chosen to validate each new block of transactions, a global network of miners competes to validate blocks of transactions, including NFT transactions, requiring each participating miner to expend a significant amount of electricity.
Although NFTs represent a small number of total transactions on the crypto-market place, they still are a major source of greenhouse gas emissions: they’re mostly bought and sold on Ethereum-based markets like Opensea, Nifty Gateway and SuperRare. Ethereum, like most major cryptocurrencies, runs on a “proof-of-work” system that consumes a lot of energy
A source quotes — ‘Every transaction on the Ethereum proof-of-work platform, including NFT transactions, consumes moreover 260 kilowatt-hours of electricity, which is equivalent to the electricity consumed by an average American household for 9.05 days’, Crazy right?
Individual pieces of crypto art, non-fungible tokens (NFTs), are at least partially responsible for the millions of tons of planet-heating carbon dioxide emissions generated by the cryptocurrencies used to buy and sell them; partially because even if an NFT transaction doesn’t take place, there will be other transactions and there will be a significant carbon footprint anyway.
What’s the solution?
Despite these, there is a way to make NFTs energy efficient which will require some strict measures.
- Switch to proof-of-stake blockchain platforms, like NEAR, Solana, Cardano, etc which are energy-intensive.
- Use of renewable sources of energy
- Invest a certain fraction of the purchase into the development of renewable energy sources, similar to how a tax works.
Lastly, it is difficult to balance both sides; we should switch to cleaner sources and look to minimize the energy consumption as much as possible.
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