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.
What is an NFT?
NFTs allow you to buy and sell ownership of unique digital items and keep track of who owns them using the blockchain. A blockchain is a decentralised, distributed, public digital ledger that records transactions across computers so that records cannot be altered retroactively without altering all subsequent blocks and the network consensus.
NFT stands for "non-fungible token," it can technically contain anything digital, including drawings, animated GIFs, songs, or items in video games. An NFT can either be one of a kind, like a real-life painting, or one copy of many, like trading cards, but the blockchain keeps track of who owns the file.
NFTs have been making headlines lately, some selling for millions of dollars, with high-profile memes like Nyan Cat and the "deal with it" sunglasses up for auction. There is also much discussion about the massive electricity use and environmental impacts of NFTs.
Since the crypto art craze is new, outside experts have yet to review all the data. Furthermore, Akten admits in a blog about his methodology that the analysis was intentionally "one-sided." Nevertheless, there are probably many greenhouse gas emissions tied to NFTs: they are primarily bought and sold in marketplaces like Nifty Gateway and SuperRare that use Ethereum.
Ethereum, like most major cryptocurrencies, is built on a system called "proof of work" that is incredibly energy hungry. A fee is associated with making a transaction on Ethereum; ironically, that fee is called "gas."
Proof of work is a security system for cryptocurrencies like Ethereum and Bitcoin since no third party, like a bank, makes overseas transactions. The system forces people to solve complex puzzles using energy-guzzling machines to secure financial records. Solving the puzzles lets users, or "miners," add a new "block" of verified transactions to a decentralised ledger called the blockchain.
The miner gets new tokens or transaction fees as a reward. The process could be more efficient on purpose. Using excessive electricity and paying a lot makes it less profitable for someone to muck up the ledger. Ethereum uses an entire country's energy/electricity.
There have been some initial estimates of how much power an NFT uses up and, consequently, how much planet-heating pollution that generates. Take "Space Cat," an NFT that's a GIF of a cat in a rocket heading to the Moon.
That website used to let people click through the estimated greenhouse gas emissions associated with individual NFTs until creator Memo Akten took it down on March 12th. Akten, a digital artist, analysed 18,000 NFTs and found that the average NFT has a carbon footprint somewhat lower than Space Cats but still equivalent to more than a month's electricity for a person living in the EU.
Those numbers were shocking to some people. Nevertheless, then Akten saw that the website used to wrongly attribute an NFT marketplace's emissions to a single NFT. He took the site offline after he discovered that it "has been used as a tool for abuse and harassment," according to a note posted on the site.
Minting and transferring an NFT can be energy intensive, but it does not need to be. What blockchain platforms use proof-of-stake operating methods to generate NFTs? Proof-of-stake operating method can generate NFTs without excessive electricity and negatively impacting the environment.
Use renewable energy: Miners using proof-of-work blockchains can use renewable energy sources to power their machines. While proof-of-work mining is energy-intensive, the head of the required energy can be free of emissions.
Invest in renewable energy: With some NFTs selling for exceptional prices, it is possible to devote some proceeds to renewable energy investments. A large-scale shift to renewable energy could curb or eliminate the environmental impact of producing NFTs.
Invest in experimental technologies: NFT sales proceeds also can be invested in experimental technologies designed to mitigate or reverse the effects of climate change. Carbon capture and storage, which collects and pumps carbon dioxide emissions into the ground, is an example of an experimental technology that some believe can solve the climate change problem.
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