As people try to trade cryptocurrency and mint NFTs in a rush, fossil fuels are still being burned. Photo: Artur Debat, Getty
The Earth is perhaps the only thing more hot than NFTs at this moment.
As people struggle to understand blockchains, trade cryptocurrency, and mint NFTs Fossil fuels are still being burned, carbon is released into the atmosphere, and the polar ice caps are melting. It’s easy to get carried away in the heat of new developments in the digital world, but even easier to forget that they have very real effects on the natural world, too.
NFTs (non-fungible tokens)—which can come in the form of drawings, music, metaverse real estate, and even selfies—are gaining speed in the digital space. These new possibilities offer artists new opportunities To earnTheir work gives them an opportunity to support creators, as well as buyers, who get the bragging right of owning exclusive content. They also have Rectified backlashTheir environmental impact.
NFTs are typically hosted on blockchain platforms, and traded using cryptocurrency. This is because NFTs can be extremely energy-intensive. How? We’ll explain broadly in a bit, but in a nutshell, it’s because it takes loads of computing power to get the whole NFT ecosystem going.
Some believe there are ways to mitigate NFTs’ environmental costs. Beeple, an artist who sold an NFT For $69 millionHe expressed an interest in making his work more carbon neutral or negative. He Submitted The VergeThis can be done by offsetting the emission from the minting and trade of NFTs, through investing in renewable energy, conservation programs, or technology that takes out carbon from the atmosphere.
What is the environmental impact of NFTs? And what can we do about it?
VICE asked blockchain experts to discuss the environmental impact of NFTs and the ways that blockchain technology can be used to reduce it in the future.
Why is it so difficult to trade NFTs?
The main reason NFTs are so energy-hungry is because they’re hosted on blockchain platforms. If blockchain is a book of records that everyone’s able to see, then there also needs to be people validating those records.
This is where “miners” come in. Miners are the essence of mining. Auditors of blockchain platforms and they use their computers or “rigs” to compete with each other to validate transactions in exchange for tokens and rewards. It’s sort of like a game where the platform offers a puzzle for miners to decrypt, and then chooses a correct answer at random, explained Matthew Azada, a cryptocurrency trader and investor. This consensus mechanism is called “proof-of-work.”
They often win rewards because miners compete to be the best (usually in the form cryptocurrency like Ethereum or Bitcoin). They can pool their efforts to increase their odds of being chosen—sort of like a lottery.
How much energy does trading NFTs normally consume?
Memo Akten, an artist, says that it is possible to mint an Ethereum-based NFT by yourself. Energy consumption: 142 kWh. This is the equivalent to about 100,000 Visa transactions, said Dexter Baño Jr., an advocate for environmental protection and technological advancements. He noted that this figure was staggeringly high in 2019, American households only used 30 kWh on averageEnergy per day
“This means that you can power a house in the United States for 4.7 days with the energy being used to mint an NFT,” he said.
Now, if you’re in the mood for some math:
“Based on data from the Energy Information Administration, there are 0.85 pounds of carbon dioxide (CO2) is released into the air every kWhwatts of electricity used. Multiplying this with the amount Each mint transaction costs energyThis amounts to 120.7 pounds CO2 per NFT created on Ethereum. This is 6.16x the CO2 output One gallon of gasoline burned,” Baño said.
It’s important to note that this only covers the creation of one NFT. The process of buying and selling each NFT involves more transactions that need to be verified—mined—and therefore even more energy that goes into all that extra computer activity.
“Since NFTs are getting mainstream, more people are transacting on Ethereum. As long as proof-of-work still exists in that chain, the environmental impact is still high,” said Angeline Viray, who trades and invests in cryptocurrencies and NFTs.
Are all NFTs bad news for the environment?
Many blockchains run on the high energy-consuming proof-of-work mechanism, but that isn’t the only way for blockchains to work. Some believe that a newer mechanism is better for the environment.
“Many new blockchains are focused on and already are reducing their overall impact on the environment, including Ethereum itself, as it’s gearing toward its shift from proof-of-work to a proof-of-stake consensus mechanism,” said JM Erestain, the co-founder of Gibki Labs, a digital transformation agency specializing in blockchains.
Instead of having all computers in the network validate each transaction and throw in their bets like in a lottery, the proof-of-stake mechanism has computers “‘stake’ your coins [to] become a validator,” explained Paul Soliman of Bayanichain, a group that aims to accelerate the adoption of digital assets in the Philippines.
In other words, potential miners need to deposit a certain number of coins to the network as an assurance that they won’t be validating any fraudulent transactions. “The network then randomly selects a validator in a completely unpredictable way,” said Soliman. “Once your node is selected, you validate transactions being done and receive a reward if your validation is correct. If you’re wrong, the network penalizes you and takes away coins from your stake.”
Soliman claims that this makes verification more efficient as it limits the pool of people who are willing to pay a fee to get a spot and further reduces the number of those the network selects for a particular round. This eliminates the free for all where computers race to be the first one to find a solution.
Why don’t all blockchains use this proof-of-stake mechanism instead?
For one thing, it’s very difficult for blockchains to make the switch while staying functional.
Additionally, some systems can select validators who stake the most money. Centralization is a tendency(opposite to the decentralization blockchains are well-known for). The mechanism also hasn’t been proven to be as secure as proof-of-work.
Ethereum claimed that it had already been Take steps in the right directionTo the proof-of–stake model. The eventual shift is predicted to reduce the environmental impact of Ethereum by 99 percent, said Tim Beiko, the coordinator for Ethereum’s protocol developers.
Are there more environmentally-friendly ways to get into NFTs?
Yes, according to Soliman.
“Firstly, purchase NFTs that are on greener blockchains, usually those that are on the proof-of-stake consensus model. This makes sure that your act of purchasing itself is greenly responsible.”
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