There has been increasing concern about the environmental impact of NFTs due to the process of creating and selling them, which can require a lot of energy and produce a large carbon footprint.
NFTs are typically created and traded on blockchain networks, which rely on a decentralized network of computers to verify and record transactions. This process is known as “mining” and requires a significant amount of computational power, which in turn consumes a lot of electricity.
The majority of blockchain networks currently use a consensus algorithm called “proof of work” (PoW), which involves solving complex mathematical puzzles to validate transactions and add them to the blockchain. This process requires a lot of computing power and energy, which is why it is often criticized for its high environmental impact.
Read also: Carbon Offsetting for Blockchains & Beyond
According to some estimates, the annual energy consumption of the Ethereum blockchain, which is one of the most popular blockchain networks for NFTs, is roughly equivalent to that of the country of Qatar. Additionally, the carbon footprint of NFTs can be further increased by the energy required to power the servers and data centers that host NFT marketplaces and platforms.
As a result, there has been growing pressure on the NFT industry to find more sustainable solutions, such as transitioning to more energy-efficient consensus algorithms or exploring alternative blockchain networks that use less energy. Some NFT marketplaces and platforms have also started to take steps to offset their carbon footprint by investing in renewable energy projects or partnering with organizations that focus on sustainability.
How NFTs threaten the climate – the main triggers to think about
The main threats from NFTs to the climate and environment are related to the energy consumption and carbon footprint associated with their creation, trading, and storage.
As mentioned earlier, NFTs are typically created and traded on blockchain networks, which rely on a decentralized network of computers to verify and record transactions. Most blockchain networks currently use a consensus algorithm called “proof of work” (PoW), which involves solving complex mathematical puzzles to validate transactions and add them to the blockchain. This process requires a significant amount of computing power and energy, which can lead to a high carbon footprint and contribute to climate change.
Read also: The NFT impact: conventional and digital art
The energy consumption and carbon footprint of NFTs can also be further increased by the energy required to power the servers and data centers that host NFT marketplaces and platforms, as well as the storage of NFTs themselves. In addition, the manufacturing of the hardware required to mine and store NFTs can also contribute to the environmental impact of the industry.
The DigitalArt4 Climate initiative is a project that uses NFTs to raise awareness about climate change and support climate-related initiatives. The initiative involves the creation and sale of unique digital artworks, with proceeds going towards various climate-related organizations.
The winners of the DigitalArt4 Climate initiative were likely chosen based on their artistic merit, relevance to the theme of climate change, and their potential to raise awareness and funds for climate-related causes.
It’s worth noting that while the environmental impact of NFTs is a significant concern, it is not unique to this industry. Many other digital technologies, such as cloud computing and streaming services, also have a high energy consumption and carbon footprint. However, the rapid growth of the NFT industry, combined with the high-profile sales of NFT artworks and collectibles, has brought greater attention to the environmental impact of blockchain technology and the need for more sustainable solutions.
- Energy consumption: NFTs are created and traded on blockchain networks, which rely on a significant amount of energy to operate. The majority of blockchain networks use a consensus algorithm called “proof of work” (PoW), which requires a lot of computational power and electricity to validate transactions and add them to the blockchain.
- Carbon footprint: The energy consumption associated with the creation and trading of NFTs can lead to a large carbon footprint. The majority of energy sources used to power blockchain networks are non-renewable, and the process of mining cryptocurrencies and NFTs can generate a significant amount of greenhouse gas emissions.
- E-waste: Manufacturing hardware required to mine and store NFTs can also contribute to the industry’s environmental impact. When electronic devices become obsolete, they often end up in landfills, generating e-waste that can harm the environment and human health.
- Data centers: The servers and data centers that host NFT marketplaces and platforms require a lot of energy to operate and maintain. These data centers can generate significant amounts of greenhouse gas emissions and contribute to the overall carbon footprint of the NFT industry.
- Transportation: The physical movement of NFTs, such as shipping artwork or collectibles to buyers, can also contribute to the industry’s environmental impact. Transportation generates greenhouse gas emissions and other pollutants that can harm the environment.
- Lack of regulation: The lack of regulation in the NFT industry can lead to unsustainable practices and contribute to the overall environmental impact of the industry. Without clear guidelines or standards for sustainable practices, the industry may continue contributing to climate change and other ecological problems.
How to reduce the negative impact of NFTs on environment?
Reducing the negative impact of NFTs on the environment will require a collective effort from all stakeholders in the industry, including creators, platforms, investors, and consumers. Here are some potential solutions that can help address the environmental impact of NFTs:
- Switch to sustainable energy: One solution is to switch to more sustainable energy sources, such as renewable energy, to power blockchain networks. This can help reduce the carbon footprint associated with NFTs.
- Use more energy-efficient algorithms: Another solution is to use more energy-efficient consensus algorithms, such as proof of stake (PoS), that require less computational power and energy to validate transactions.
- Offsetting carbon emissions: NFT marketplaces and platforms can also consider offsetting the carbon emissions generated by their operations and transactions. This can be done by investing in carbon credits or funding renewable energy projects.
- Sustainable production and shipping: Creators and platforms can also prioritize sustainable practices in the production and shipping of NFTs. This can include using eco-friendly materials, minimizing packaging waste, and using low-emission transportation methods.
- Increase awareness: Increasing awareness about the environmental impact of NFTs can also help encourage consumers and stakeholders to take action. This can include educating users about the environmental effects of their NFT transactions and promoting sustainable practices in the industry.
- Develop sustainable standards: Developing sustainable standards and guidelines for the NFT industry can also help promote sustainable practices and reduce the industry’s negative environmental impact.
Addressing the environmental impact of NFTs will require a combination of technical solutions, sustainable practices, and increased awareness and education. By working together, the NFT industry can help mitigate its environmental impact and promote a more sustainable future.
Eco-Friendly NFTs? Here is the TOP green NFT projects/platforms
There are a growing number of eco-friendly NFT projects emerging in response to the concerns about the environmental impact of NFTs. Here are a few examples of eco-friendly NFT projects:
- Tezos-based Hic et Nunc: Hic et Nunc is an NFT marketplace built on the Tezos blockchain, which uses a consensus algorithm called proof of stake (PoS) that requires significantly less energy consumption than the proof of work (PoW) algorithm used by most other blockchains.
- Solana-based DigitalEyes: DigitalEyes is an NFT marketplace built on the Solana blockchain, which also uses a PoS consensus algorithm and is designed to be more energy-efficient than other blockchains.
- Terra Virtua: Terra Virtua is a platform for buying, selling, and displaying NFTs committed to sustainability by using eco-friendly packaging and partnering with sustainable charities.
- Binance Smart Chain-based BakerySwap: BakerySwap is an NFT marketplace built on the Binance Smart Chain, which also uses a PoS consensus algorithm and has a lower environmental impact than other blockchains.
- Flow-based NBA Top Shot: NBA Top Shot is an NFT marketplace for officially licensed NBA collectibles built on the Flow blockchain, designed to be more energy-efficient and scalable than other blockchains.
- WAX: WAX is an NFT marketplace built on the EOSIO blockchain that uses a Delegated Proof of Stake (DPoS) consensus algorithm, which is more energy-efficient than PoW. Additionally, WAX has implemented various sustainability measures, including using renewable energy sources and offsetting carbon emissions through the World Wildlife Fund.
- KodaDot: KodaDot is an eco-friendly NFT platform that aims to use blockchain technology to support environmental conservation efforts. They partner with various charities and organizations to create NFTs that raise funds for environmental causes, and they are committed to using sustainable business practices.
- GEMINI NFT: GEMINI NFT is an NFT marketplace built by the cryptocurrency exchange Gemini, which uses renewable energy sources to power their operations. They have also partnered with Climate Vault, a nonprofit organization that helps companies offset their carbon emissions by buying and retiring carbon permits.
- Aerial: Aerial is an NFT platform that focuses on aerial photography and artwork, committed to sustainability. They use carbon-neutral printing techniques, offset their shipping emissions, and donate some of their proceeds to conservation organizations.
- CryptoArt.ai: CryptoArt.ai is an NFT platform that aims to create a more sustainable NFT industry by using a PoS consensus algorithm and offsetting their carbon emissions through various environmental initiatives.
Why is NFT not environmentally friendly?
NFTs are not environmentally friendly because they are built on blockchain technology, which requires a lot of energy to operate. This is because the blockchain relies on complex algorithms and vast networks of computers to validate transactions and maintain the ledger. As a result, the energy consumption associated with NFTs can lead to a significant carbon footprint and contribute to climate change.
Does NFT cause global warming?
NFTs do not directly cause global warming, but their high energy consumption can contribute to climate change. The energy required to power the blockchain infrastructure and mint NFTs can result in significant carbon emissions. Therefore, it’s important to develop more sustainable and eco-friendly approaches to NFTs to reduce their environmental impact.
How much energy do NFTs use?
The exact amount of energy used by NFTs varies depending on factors such as the blockchain platform they are built on, the size and complexity of the NFTs, and the number of transactions involved in their creation and transfer. However, some estimates suggest that creating and transferring a single NFT can consume as much energy as an average household in a month, while other estimates suggest that the energy consumption of the entire NFT market could be equivalent to that of a small country. The environmental impact of NFTs is a complex issue, but it’s clear that the energy consumption associated with the technology is significant and warrants further attention and sustainable solutions.