Why Are NFTs Bad for the Environment? – NFT Carbon Footprint

While technology marches ever forward, changing the way we do business and live our lives, not everything is as it may seem. While at first glance, one would think that digital versions of images would actually be beneficial to the environment, as they do not have to be physically printed to have value, thereby using more resources such as paper and ink. However, it is not the NFTS themselves that have a carbon footprint, but rather, the method by which they are mined. But, how are NFTs bad for the environment, and can we do anything about the environmental impact of NFTs?

Why Are NFTs Bad for the Environment?

Nowadays, NFTs seem to have almost everyone talking about their benefits and disadvantages. More than ever, they want to find out how to go about creating them, buying them, and making sure that they are worthwhile investments. However, despite the rapid growth in interest, there is still much to learn about what long-term effects these types of digital transactions will have, and many concerned individuals have begun to voice their concerns over the environmental impact of NFTs. But how does a digital copy of something leave a carbon footprint and how are NFTs bad for the environment?

While the creation and storage of these NFTs do not require much energy, the buying and transferring of NFTs require the mining processes of blockchain technology, which themselves are energy-guzzling processes, especially the validation method which computes the proof-of-work. But, how do these processes use energy, and why are NFTs bad for the environment? For many people who are not too tech-savvy, this might all seem a bit confusing, yet this article will attempt to clarify these concepts so that we may gain a better overall understanding of the systems that are used and the impact those systems eventually have on the environment.

What Exactly Are NFTs?

An NFT is not an object, like a trading card or a painting, but rather serves as a digital receipt that proves ownership of the object. This is different from cryptocurrencies, though, as each token’s value is unique and does not equate in value to another token, which means it is non-fungible. However, a fungible token, such as a coin, will always represent the same amount – a quarter, for example, will always be 25 cents.

Cryptocurrencies are still part of the process, though, and are used to purchase NFTs.

While in the traditional world, one generates income by working or selling goods, NFTs are generated through digital mining processes. This process makes use of a network of computers that create and verify blockchain information – a kind of digital ledger that is regulated by the users themselves. The network is decentralized and makes use of users’ computers to process all the data required for the ledger. In return for using their machines to mine, the users are paid in cryptocurrency, which they then save or resell, or use to purchase NFTs. However, these machines are not just employed to mine data, they can also produce NFTs. After it is initially created, an NFT then gets posted on the NFT marketplace as a digital file. No one can buy the NFT until it has been added to the blockchain through a process known as “minting”. Mining is also required in this minting process.

How Are NFTs Bad for the Environment?

The environmental impact of NFTs all boils down to this mining process. This is because it involves an energy-intensive method known as “proof of work”. The aim of this method is to make it impossible for someone to steal items or produce fake ones. This method is very labor-heavy and requires much more powerful computers than most people have in their homes. Whereas you can have many miners all trying to mine simultaneously, only one of them will eventually receive the cryptocurrency for verifying data or minting the NFT.

This means that there are often multiple extremely powerful machines all trying to complete the same job, which is a very inefficient use of energy.

A massive amount of energy is used when you have so many competing miners all using energy-hungry machines. Around 150 terawatt-hours of power are guzzled up every year just to mine bitcoin – more than the energy consumption of a small country. The currency most often used to buy NFTs, Ethereum, has been estimated to have the same size annual carbon footprint as Hong Kong. One of the major issues is that this mining occurs in countries that mostly use sources of energy that are regarded as harmful to the environment.

For instance, oil, gas, and coal are used to fuel Kazakhstan’s power grid, which is considered to be the leader in mining bitcoin. It’s even worse in the United States, where power plants that use coal which were about to be closed, have been put back into use purely for bitcoin mining. Even power plants that are powered by gas are now solely being used for the mining of bitcoin. This has resulted in an increase in carbon emissions during a period when efforts are being made to drastically reduce them.

Is There a Possibility of Eco-Friendly NFTs?

The Proof-of-work method has ironically proven not to work. The sheer amount of power needed to run the system is wholly unsustainable, but, is there anything that can be done about it? In an ideal world, mining would be powered by sustainable and clean energy, such as solar, water, and wind-generated power. Many places, such as Washington D.C. and Puerto Rico, have committed to achieving 100% clean energy generation in the next few decades.

This may be a great long-term solution, but more immediate solutions are required as well.

This would entail moving away from the proof-of-work system. In the proof-of-work system, many miners all compete for the same job, whereas with the proof-of-stake system, this task is randomly assigned to a miner who then mints and verifies the NFT without all the complex energy-guzzling processes. This results in fewer computers required for any given task, and consequently – less energy consumption. There are several platforms that have now begun to adopt the proof-of-stake method, such as Band NFTs, Splinterlands, NFTX, The Sandbox, Doge Capital, and Polychain Monsters. Even Ethereum, probably one of the biggest power-hungry platforms, has made the change as of September 2022.

Realizing the massive carbon footprint that their processes were creating, they moved away from the proof-of-work system, enabling them to cut down their carbon emissions by more than 99%. The company claims that it had wanted to implement a proof-of-stake system from the very beginning, however, due to security concerns, it took a few years to iron out the issues that prevented it from changing to the new system. The old system required that miners’ computers calculate a specific value – using up large amounts of energy in the process. Before swapping over, their carbon emissions equated to that of countries such as Azerbaijan. Not only did the swap significantly lower consumption and emissions, but it also made the platform more secure at the same time.

Potential Ways to Decrease Energy Consumption

Proof-of-work is still used by many platforms, and it will be extremely difficult to find energy-efficient methods to sustain such a system long-term. Changing to proof-of-stake goes a very long way to dealing with the issue. There are several other steps that can be taken to lessen the environmental impact.

• Utilize renewable energy: Those who still mine using the proof-of-work system can still make a difference by powering their systems with renewable energy sources. Even though it might still require a lot of energy to run – at least the power for the system will not increase the levels of carbon emissions. While it may not be as good as changing to a new system it will still make a huge difference in one’s carbon footprint. NFTs can sell for large sums of money, and a portion of that money could be used to invest in sustainable energy.

• Investing in new technologies: The money made from NFTs could also be used to invest in new technologies that could potentially reverse or at least mitigate the impact on the environment. One example of this kind of technology is the capture and storage of carbon – an early experimental technique that could have a very positive impact on climate change. The only thing that will drive these initiatives forward is adequate funding.
• Choose platforms that use proof-of-stake: While one could try and mitigate the consequences of certain systems, the best way forward would be to work with platforms that have already made the change for the better. While there was once no other option, and many could use this as an excuse, if you know better, you should try to do better. Although it may seem like one person cannot make a difference, it just takes every person to take that one step for us to move forward as a collective. Currently, there are several potential platforms to choose from that utilize the proof-of-stake system, such as Solana, Cardano, Algorand, Tezos, and Ethereum.

NFTs and cryptocurrency were touted as a new system that would change the way people made money. Yet, not much was ever publicly mentioned about the potential damage to the planet. A system that prioritizes digital images over actual life is by no means a sustainable one. However, many of these platforms are now making changes that lessen the environmental impact of NFTs. By changing systems, they have managed to cut their carbon footprint by more than 99%, which is a really incredible achievement. Yet, there is still a long path ahead, as the bulk of the machines being used in mining are still being powered by dirty energy such as coal, natural gasses, and oil. It is only through embracing sustainable energy solutions that the problem can ever fully be addressed. Until then, those who mine, sell, and buy NFTs can incorporate one of the many methods of lessening their own carbon footprint.

Frequently Asked Questions

Why Are NFTs Bad for the Environment?

It all comes down to energy efficiency, or in the case of NFTs, the lack thereof. While it does not take much energy to actually create an NFT, there are several steps that follow, such as verification and minting, which are all very energy-intensive. The whole process is facilitated by the mining of data – a process that guzzles energy, as many miners all use their computers to tackle a single task that only one person will actually finally mint. All of these machines being used at once is an extremely complex process and demands that many machines handle a task that could be accomplished by one. The alternative solution to the proof-of-work method is the proof-of-stake method. This method assigns that task to a single person, thereby using one computer using a certain amount of energy to a task instead of several.

How Are NFTs Bad for the Environment?

One of the biggest issues is not only the amount of energy required for a single transaction but how that energy is being generated in the first place. Many of the world’s biggest mining countries are not first-world countries with sustainable energy sources, but are developing countries that still largely rely on dirty energy sources such as oil, gas, and coal. In fact, even first-world countries such as the United States cannot keep up with the demand for power required to fuel all these machines. Several coal and gas power plants that were on the brink of being decommissioned were brought back online just to handle the mining of Bitcoin. Thankfully, many platforms are now taking the necessary steps to drastically lower their carbon footprints by adopting new systems and cleaner energy sources.

What Can We Do to Lessen Our NFT Carbon Footprint?

There are several steps available right now that can be implemented by anyone who works with NFTs. Invest in and use renewable energy sources, and experimental technologies. Only use platforms that have adopted the proof-of-stake system.

Charlene Lewis( Content Creator and Creativity Writer )

In 2005, Charlene completed her Wellness Diplomas in Therapeutic Aromatherapy and Reflexology from the International School of Reflexology and Meridian Therapy. She worked for a company offering corporate wellness programs for a couple of years, before opening up her own therapy practice. It was in 2015 that a friend, who was a digital marketer, asked her to join her company as a content creator, and this is where she found her excitement for writing.

Since joining the content writing world, she has gained a lot of experience over the years writing on a diverse selection of topics, from beauty, health, wellness, travel, and more. Due to various circumstances, she had to close her therapy practice and is now a full-time freelance writer. Being a creative person, she could not pass up the opportunity to contribute to the Art in Context team, where is was in her element, writing about a variety of art and craft topics. Contributing articles for over three years now, her knowledge in this area has grown, and she has gotten to explore her creativity and improve her research and writing skills.

Charlene Lewis has been working for artincontext.org since the relaunch in 2020. She is an experienced writer and mainly focuses on the topics of color theory, painting and drawing.

Learn more about Charlene Lewis and the Art in Context Team.