A Future of Green NFTs: How NFTs Can Help Improve the Environment
There are mixed feelings around the world about the fast growth of NFTs. Some people are ecstatic about the opportunities that NFTs present for a decentralized world, while others are wary of embracing what they consider a fad. But a third group — environmentalists — are worried about what NFTs and the global adoption of NFTs may mean for the environment.
It’s no news to anyone that the environment is dangerously warming up. The current climate crisis has spotlighted all industries whose activities have negative impacts on the environment. One of these industries is the blockchain industry. As World Environment Day approaches, it’s time to ask the critical questions: Are NFTs bad for the environment?
Are NFTs Bad for the Environment?
Non-fungible tokens on their own do not pose any harm to the environment. On the contrary, they reduce the environmental impact when you consider that they are primarily digital collectibles and do not require canvas or paint to create. But they have a more insidious drain on the environment, which comes from how they are made.
NFTs can be labeled bad for the environment because they require a lot of energy to produce. To understand how this happens, you’ll need to know how NFTs are made.
Most NFTs are minted on the Ethereum network that uses the proof-of-work consensus mechanism to mint. The PoW is a simple minting mechanism that allows miners to compete against each other to mint an NFT. The miner who solves the puzzle fastest gets to mint the block of NFTs.
This is the same as Bitcoin’s proof-of-work mechanism used to secure the blockchain, validate transactions, and mine new cryptocurrencies. This same process makes Bitcoin a large energy user and a strong contributor to the climate crises we’re experiencing.
The amount of energy required to mint new NFTs using this PoW method is astronomical. It takes over 142kWh of energy to mint one NFT and 48kWh for one NFT transaction.
These are some high numbers, but just like cryptocurrency companies found ways to minimize their impact on the environment, there are ways NFTs can be more eco-friendly.
How NFTs Can Be More Eco-friendly
NFTs can be more eco-friendly by modifying their operational mechanism or mediating the effect of their operations on the environment. Here are a few ways NFTs can use less energy:
Using Renewable Energy Resources
An excellent way to ensure that the operational mechanisms of NFT minting and trading are eco-friendly is to use renewable resources. Miners can draw power for their activities from renewable energy sources with zero atmosphere emissions, such as hydroelectricity, solar energy, and geothermal power. These forms of energy have very low impact on the environment instead of energy sources from fossil fuels.
Some companies in the blockchain space have already invested in renewable energy to power their operations. Using these forms of energy reduces the impact of minting on the environment.
Contributing to Conservation Projects
One of the standard ways for NFT and Blockchain companies to contribute to conserving the environment is to donate towards environmental conservation projects, particularly carbon offsetting projects like carbon capture, which collects carbon dioxide from the atmosphere and stores it in reservoirs underground.
This method is very effective because there would always be an operational energy cost required to mint and transact NFTs. However, this cost can be reduced by switching to renewable energy. Financially supporting environment conservation programs ensures that NFT companies match and even exceed the negative impact of their operations.
Investors in NFT projects can fund some of these carbon offset projects to reduce their contribution to the carbon dioxide emitted into the atmosphere due to NFT minting. Asides from donating money, companies can also buy carbon offset credits.
Migrating to Proof-of-Stake
Proof-of-Stake is a consensus mechanism, just like the proof-of-work mechanism that Bitcoin runs on is also a consensus mechanism. A significant difference between the two consensus mechanisms is that PoW is more power-consuming than PoS.
Blockchain networks like Ethereum are already working hard to migrate from PoW to PoS by the end of the year, and Ethereum is looking to reduce its energy consumption by 99%.
Using Off-Chain Solutions
A great way to reduce energy consumption in NFTs is to build a second layer and place most NFTs on it. This would route all NFT transactions through specific channels between users on the second layer with negligible energy costs.
Validating the ledger is done through a batch process that validates transactions in a bundle.
Energy Efficient Blockchains
Using energy-efficient methods is not new to blockchains. Here are four blockchains that are eco-friendly.
Tezos
Tezos has mastered using very little energy to manage its operational activities. Each NFT transaction on Tezos costs 30Wh of power, and in one year, they use an approximate 60MWh.
Solana
Solana processes a tonne of transactions in short periods and yet uses up little amounts of energy. Each transaction consumes 0.00051kWh of energy. In a year, Solana expends 935 tonnes of carbon dioxide into the environment and uses up enough energy to power 1038 homes.
Immutable X
Immutable X uses a two-layer solution to scale back the energy they consume. They also offset their carbon emissions by contributing to climate conservation partners and projects.
Cardano
Cardano is another blockchain that does an excellent job of reducing its carbon footprint. Each transaction on Cardano uses a negligible 0.5kWh of energy and consumes only 284 tonnes of energy every year. They also work with green NFT marketplaces.
Bottom Line
NFTs provide hope for a sustainable future with fewer physical products and more digital tokens. But for us to get there, NFT companies have to find a way to reduce the environmental impact caused by the operational activities associated with NFTs. There’s much more to be done than the suggestions above, and in the future, there can be hope for a truly sustainable environment with NFTs playing their part.
