The recent boom in non-exchangeable tokens, or NFTs, has been linked to controversy and concerns about the environmental impact of technology over necessary computing power.
Of all types of transactions on the blockchain, NFTs are the most intense, as they often involve many complex transactions and the implementation of smart contracts in the process of placing, trading, selling and transferring. Sometimes this translates into transaction costs that are hundreds of times more expensive than simple transaction costs.
In the past, the impact of such concerns has been minimal, but in recent weeks some artists and platforms have begun to cancel NFT’s plans as a result. Digital artist Joanie Lemercier canceled her second visit to Nifty Gateway after realizing the environmental impact of the platform’s sales:
“It turns out that version 6 of CryptoArt Works used more power in 10 seconds than the entire studio in the last two years.”
Art portfolio platform ArtStation suspended NFT reductions by renowned artists a few hours after it was announced due to an overreaction to NFT’s environmental impact.
However, the real numbers behind NFT’s real carbon footprint remain elusive.
In December 2020, computer artists and engineers developed the Memo Akten CryptoArt.wft platform that calculates energy consumption and CO2 emissions for any NFT on SuperRare, Nifty Gateway or a single transaction on Ethereum.
According to the website, the aforementioned NFT uses 421 kWh on SuperRare, which is the energy equivalent of a 1.5-month EU citizen’s electricity consumption. On the website, Akten provided a link to its detailed analysis of the calculations, adding that the average NFT consumes approximately 340 kWh.
Offsetra, a project that helps compensate for carbon emissions from cryptocurrencies, uses the same method as the Act, but admits that there are “obvious gaps” in the accounts. Although these figures are alarming, they only apply to evidence of work blockages (including Ethereum and Bitcoin) and use different assumptions.
“We are currently including a 20% buffer in our calculations to account for both unknown mining basins and grid efficiencies that can lead to energy loss (for example due to heat loss at the site of use),” added Ofstra. … This buffer was removed 20% on March 8th.
However, there is light on the horizon with the emergence of a Proof of Stake blockchain like Eth2. Acton stated that these are viable alternatives to NFT minting and use only a small fraction of the processing power needed to process securely.
“ETH2, also known as Serenity, [uses] the ProSO-of-Stake Consensus (PoS) algorithm, which is orders of magnitude more computationally efficient.”
Nifty Gateway responded to artist Lemercier’s fears by saying that Layer2 could be distributed to Ethereum in a few weeks, thereby “we can reduce the impact by 99% today.”
SuperRare wrote an article in response to some environmental considerations, saying that calculating transaction costs for NFTs was the wrong approach, given that total blockchain costs remained the same regardless of the number of transactions.
“In other words, if everyone takes a break from using Ethereum applications and no transactions are sent for an entire day, the carbon footprint of the network will remain the same.”
SuperRare explained that they, like many in the Ethereum community, are aware of the inefficiency of PoW blocks and have promised to donate money to help with ETH2 research by exploring alternative expansion options.
But what if crypto is good for the planet?
Taking a non-obvious approach, Delphi Digital co-founder and research leader Medio Demarco wrote a recent post claiming that cryptocurrency mining can really help save the planet. He states that the grid stimulates cheap energy, which now means clean energy.
Some of his ideas are about miners using clean, unused electricity, which allows green energy uses to convert 100% of production, not just a fraction of it. This in turn may be enough to finance new infrastructure for clean energy. He argued:
“The result may be affected by the difference between financing new solar energy infrastructure at the moment or expecting an improvement in the economy.”