Non-fungible tokens are the individual pieces of crypto art that are highly responsible for the thousands of tons of carbon dioxide emissions generated by different cryptocurrencies used to buy as well as sell them. These planet-heating gas emissions and massive energy consumption are the reasons that are keeping environmentalists up at night. They are adding more to the overall carbon footprint created by cryptocurrency, especially Ethereum. Without a doubt, NFTs are the next big thing. But, it is claimed that this digital token uses as much electricity as the whole country of Libya. Greater demand for NFTs and their transactions can lead to even more increased emissions. The thing is, NFTs can really drive up the value of Ethereum. This is why people are mining these energy-hungry tokens more for their profits. It is increasing the number of machines that these miners use.
NFT And Its Impact On The Environment
NFTs are unique cryptocurrency tokens. They can take up the form of almost anything such as a GIF, art, or even a tweet. The website Digiconomist estimates that a single Ethereum transaction consumes almost about 70.32 kWh of energy. It is sufficient to power one household for approximately 2.5 days. This means that it has a carbon footprint of around 34 kg CO2. The electricity consumption of NFTs is more than one whole country combined. This has, in turn, made this even a bigger problem. The transaction in the Ethereum blockchain is the prime reason for this happening. There are a lot of stages in NFT transactions such as transferring, bidding, selling, etc. This is why there are more computation requirements in it.
A lot of cryptocurrencies are secure because of the proof of work (PoW), a mining process that requires a lot of energy. Meaning, the blockchain technology is energy-intensive by design itself. PoW is a security system for such cryptocurrencies as there is no involvement of intermediaries. The system makes sure that the financial records are safe. Thus, it asks people to solve complex puzzles using machines that take up a lot of energy. It allows the users to add a new block of the transactions that are verified to a decentralized ledger known as the blockchain. After this, the user gets transaction fees or even tokens as rewards. This is the reason why the process of NFT transactions is energy inefficient. This excessive amount of energy usage makes it a less profitable option for a person to mess up the ledger. Result? Environmental degradation!
The NFT market is growing and the resultant surge in CO2 emissions and energy consumptions are very unsettling. This is when we talk about the fact that the higher the price of a cryptocurrency, the higher will be the reason for people to participate in the computations. This will require a lot more energy than before.
It is evident that the issue of NFT-related emissions is overshadowed by the shimmer of wealth generation. But, a time will come when both the climate experts and the environmentalists pass the alarming news of an unparalleled rise in the severe weather conditions, temperature, species extinction, sea level, and other events happening that in the end will add to the increase in global warming.
Action Must Be Taken
While the NFT market is in its infancy, let us not forget the fact that it is growing at a rapid rate. There is intense pressure on artists and green-minded collectors to reduce carbon emissions. It is necessary for crypto art and NFT platforms to publicly address these sustainability issues. They should also commit to reducing the overall carbon footprint. It would be great if we could someday devise a system that can track the mining process of the company responsible for such huge energy consumption.
We need to keep this thing in mind that it doesn’t matter what type of blockchain it is, electricity consumption and emission of gases is not the only contributor to the environmental footprint. There will be a need for more computer hardware with the increase in cryptocurrency miners. This will in turn will have a horrific impact on our environment. Thus, the overall carbon footprint of NFTs tends to be higher than what researchers have already estimated. To solve this issue, the creator of Ethereum, Vitalik Buterin, confirms that they are going to remodel this year. This will reduce energy consumption by 99% with the help of Ethereum 2.0. It is a more environmentally friendly alternative as compared to Bitcoin.