Why NFTs are Bad for the Environment

Tanya Sharma
Tanya Sharma Published on March 09, 2023 09:08 AM

Non-fungible tokens (NFTs) are digital assets that represent art, music, and in-game objects. Although these have become attractive collector's goods, there is rising worry about their environmental impact.

why nfts are bad for the environment
Source: Unsplash

Have you heard about NFTs, the latest trend in the art and digital world? NFTs, or non-fungible tokens, are unique digital assets that are bought and sold on blockchain platforms. They have become incredibly popular among artists, musicians, and even celebrities who are looking to monetize their creations in a new way. 

However, there's a hidden cost to this craze that many people aren't aware of: the impact on the environment. In this blog, we'll explore why NFTs are bad for the environment and what we can do to mitigate their harmful effects. So, buckle up and get ready to discover the dark side of this seemingly innovative technology.

Are NFTs Bad for the Environment?

NFTs have been making headlines lately, with digital artists and creators alike seeing them as a new and innovative way to monetize their work. However, there's a dark side to this seemingly innovative technology: its impact on the environment. NFTs themselves do not directly impact the environment, but the way they are minted can have substantial environmental consequences.

When a buyer purchases the NFT, a blockchain transaction is initiated. This transaction is processed according to the consensus algorithm of the blockchain used by the marketplace. The two most commonly used consensus algorithms are proof-of-work and proof-of-stake.

Proof-of-work algorithms, which are used by blockchains like Ethereum and Bitcoin, rely on complex mathematical equations that must be solved in order to validate a transaction. This process, known as mining, requires vast amounts of computational power and energy, often generated through the burning of fossil fuels. As a result, proof-of-work algorithms are incredibly energy-intensive and have a significant impact on the environment.

Proof-of-stake algorithms, on the other hand, are much less energy-intensive. They rely on validators, who are chosen based on their stake in the network, to validate transactions. Validators are incentivized to act honestly through the promise of rewards, and the energy requirements are significantly lower than those of proof-of-work algorithms.

How NFT Via Proof-of-work is Bad for Environment?

The use of proof of work to process NFTs can have serious environmental implications. The energy consumption and electronic waste generated by the mining process are key environmental concerns that should be considered when considering the use of NFTs. As a result, it's critical to examine alternate consensus methods, such as proof of stake, which need far less energy and have a reduced environmental impact.

Why? Because the PoW process works like this:

  • Proof-of-work algorithms rely on solving complex mathematical equations to validate transactions on blockchains like Ethereum and Bitcoin.

  • The mining process requires vast amounts of computational power and energy, often generated through the burning of fossil fuels, leading to a significant environmental impact.

  • The energy consumption of proof-of-work algorithms is a major concern for the environment as it contributes to greenhouse gas emissions, degrades air quality, and can have long-lasting environmental impacts.

  • Mining cryptocurrencies like Bitcoin and Ethereum results in a significant amount of electronic waste due to the constant need for more powerful hardware.

  • The electronic waste generated not only contributes to environmental degradation but can also pose a significant health risk to those living in close proximity to e-waste dumps.

Are NFTs Via Proof-of-Stake Bad for Environment?

With a proof-of-stake blockchain like Ethereum, the NFT procedure through the marketplace is the same until the transaction begins:

  • The network has queued the transaction.

  • The transaction is validated by a validator who has staked 32 ETH at random.

  • Because only one validator is conducting the task, the energy consumption is significantly reduced. Indeed, Ethereum says that it now consumes 99.95% less energy than it did with proof-of-work consensus.

  • The validator verifies the transaction and broadcasts the results to other validators, who vote on whether or not to confirm the block and transaction.

  • Because this method does not employ competitive number creation, the transaction consumes less than 0.03 kWh, or 30 Watt hours (the equivalent of around six 9v batteries).

Here are some key points about how NFTs via proof of stake affects the environment:

  • Proof of stake is a consensus algorithm used to process NFTs that is significantly less energy-intensive than proof of work.

  • Rather than relying on miners to solve complex mathematical equations to validate transactions, proof of stake uses staking, where users hold a certain amount of cryptocurrency as a stake in the network.

  • The more cryptocurrency a user holds, the more likely they are to be chosen to validate transactions, which significantly reduces the energy consumption and environmental impact of NFT processing.

  • While proof of stake has a lower environmental impact than proof of work, it still requires some amount of energy consumption and infrastructure, which can still have an impact on the environment.

  • However, compared to proof of work, proof of stake is a much more sustainable alternative that can significantly reduce the environmental impact of NFT processing.

NFT Via Ethereum 2.0: Is it Good or Bad for Environment?

As previously noted, the Ethereum blockchain is used in the majority of digital art transactions. Ethereum was previously based on the PoW system. Vitalik Buterin, the founder of Ethereum and a Russian-Canadian computer programmer, recently revealed that the business would migrate to the PoS system in September 2022.

Ethereum and other cryptocurrencies have witnessed precipitous price decreases in the last six months. The Merge, Ethereum's transition to the PoS consensus method, was a success, and it has the potential to restore Ethereum's favorable reputation. 

This transition should have a significant and immediate impact on the environmental impact of NFTs and digital art: The switch to PoS in Ethereum 2.0 is expected to require 99.95% less energy than it did while it was using PoW, which is significant.

Can NFTs Ever be Sustainable?

NFTs have been a controversial topic in recent times, and rightly so. While they offer a way for artists and collectors to monetize digital art and other virtual assets, their impact on the environment has been a major concern. The process of minting and transferring NFTs is energy-intensive, but there is hope for a greener future.

Blockchain platforms that utilize the proof-of-stake operating method can generate NFTs without significantly using electricity or having a negative impact on the environment. Unfortunately, this isn't possible under proof-of-work blockchains, but there are options for creators and fans of NFTs.

Renewable Energy Sources

One way to reduce the environmental impact of NFTs is by using renewable energy sources to power machines used for mining proof-of-work blockchains. While proof-of-work mining is energy-intensive, renewable energy sources can eliminate emissions from the process.

Invest in renewable energy

Another way to reduce the environmental impact of NFTs is by investing a portion of the proceeds from NFT sales in renewable energy. A large-scale shift to renewable energy sources can help to eliminate the environmental impact of producing NFTs.

Invest in experimental technologies

Carbon capture and storage is an experimental technology that can mitigate or reverse the effects of climate change. Investing in such technologies is another way to offset the environmental impact of producing NFTs.

Choose NFTs minted on proof-of-stake blockchains

A more straightforward way to reduce the environmental impact of NFTs is by choosing NFTs minted on proof-of-stake blockchains. By only purchasing and minting NFTs on these platforms, we can significantly reduce the environmental impact of NFTs.

Controversial Talks Surrounding NFTs Carbon Footprint

  • "The Truth about NFTs and Energy Consumption" by Alex de Vries: This talk by the founder of Digiconomist explores the environmental impact of NFTs and provides data on the energy consumption of the blockchain network that supports NFT transactions.

  • "The Carbon Footprint of NFTs: Understanding the Environmental Impact" by Joanie Lemercier: This talk by the digital artist and activist Joanie Lemercier discusses the carbon footprint of NFTs and provides suggestions on how to reduce their environmental impact.

  • "NFTs: A Catalyst for Decentralized Energy?" by Gerard Bel: This talk by the CEO of a renewable energy company explores the potential for NFTs to promote the adoption of decentralized energy systems.

  • "The Energy Cost of Digital Art and NFTs" by Memo Akten: This talk by the artist and researcher Memo Akten discusses the energy cost of digital art and NFTs and suggests ways in which artists and collectors can reduce their environmental impact.

  • "The Hidden Costs of NFTs: Energy, Art and the Environment" by Kate Crawford: This talk by the academic and researcher Kate Crawford explores the hidden costs of NFTs, including their impact on energy consumption and the environment.


What is the environmental impact of NFTs?

NFTs (non-fungible tokens) have been criticized for their high energy consumption, which contributes to carbon emissions and environmental degradation. The creation and trading of NFTs require significant computing power, which in turn requires large amounts of energy.

How much energy does an NFT transaction consume?

The energy consumption of an NFT transaction depends on the specific blockchain network used for the transaction. Some estimates suggest that the energy required to create and trade a single NFT is equivalent to the electricity consumption of an average household for several weeks.

What is the carbon footprint of NFTs?

The carbon footprint of NFTs refers to the amount of greenhouse gas emissions, mainly carbon dioxide, produced during the creation and trading of NFTs. Due to their high energy consumption, NFTs have a significant carbon footprint.

Are NFTs contributing to climate change?

Yes, NFTs are contributing to climate change by contributing to the increase in greenhouse gas emissions. The creation and trading of NFTs require significant amounts of energy, and the use of fossil fuels to generate this energy contributes to climate change.

Can NFTs be made more sustainable?

Yes, NFTs can be made more sustainable by using renewable energy sources for the computing power required for their creation and trading. Additionally, some blockchain networks are more energy-efficient than others, so choosing a more sustainable network can also reduce the environmental impact of NFTs.





Bank of Korea Collaborates With Local Institutions And BIS On A Wholesale CBDC Pilot
Bank of Korea Collaborates With Local Institutions And BIS On A Wholesale CBDC Pilot
October 10, 2023 07:00 AM