Sustainability: the modern humanity problem
Sustainability has always been a popular debate topic at world conferences. As technology drives human productivity to all-time highs, the collective voice to protect Mother Nature and the needs of future generations has never been stronger. Simple habits are easily scrutinised for their lack of environmental empathy, i.e. driving to work, eating beef, buying imported goods, printing documents, or even using straws.
Today, NFTs are in the hot seat and on the “bad-for-planet” radars of many environmentalists and passionate Twitter folks. While media headlines of million-dollar JPEGs spread the hype, the growth in popularity has raised warning signs on how bad these digital art pieces are for the environment, especially in an age of accelerating climate change.
In this article, we uncover the environmental issues with NFTs, explain the reasons behind such concerns, and clarify how NFTs can be sustainable in the future.
NFTs are destroying our planet
The use of NFTs to represent ownership of things like digital art has garnered strong opinions from society, most of which come from outside the little bubble that likes collecting JPEGs. From a spectator’s point of view, they condemn any dealings with crypto and NFTs and effortlessly label them as environmentally unethical without truly understanding the technology.
Like how the digital artists on the online marketplace, ArtStation, who labelled NFTs as an “ecological nightmare pyramid scheme”, or the supporters of the World Wildlife Fund (WWF) UK, who sparked an extreme backlash against funding conservation work through NFT sales, even professionals like Dr David Shiffman, an environmental research scientist, calls NFTs “bad for the environment” and urges people to stay away instead of finding sustainable workarounds.
But what are these naysayers saying?
In essence, most advocates of the “NFTs are destroying the planet” argument put them partially responsible for the tons of planet-heating CO2. And apparently, for solid reasons. While the carbon footprint of NFTs can be tricky to estimate, the average of 18,000 NFTs studied by Memo Akten (creator of cryptoart.wtf) was equivalent to more than a month’s worth of residential electricity usage in the EU. The average footprint was similar to driving for 1,000km or flying for 2 hours, which translates to around 340 kWh or 211 kg of CO2
In the context of NFT art, a single NFT transaction is estimated to be 14 times more harmful to the environment than mailing a physical art print. Such emissions can have costly consequences, as Beeple, creator of “Everydays: The First 5000 Days”, estimates that it costs US$5,000 to offset the carbon footprint from one of his collections. Despite efforts to greenwash NFTs with unreliable and unjustified carbon offset programs, people have no trouble seeing the energy-intensive side of NFTs.
But why are NFTs so ‘un-environmentally-friendly’?
NFTs are data that assigns ownership of digital assets recorded on a distributed ledger, known as the blockchain. Each time an NFT gets minted or sold, computational work is needed to verify and add transactions (stored in blocks) to the existing data.
The energy-intensive problem becomes apparent as most NFTs exists on the Ethereum blockchain or Ethereum-based marketplaces such as OpenSea, SuperRare and Rarible, which runs on Proof-of-Work (PoW). These transactions often involve the use of ETH and incur a “gas fee”, which consumes electricity (lots of it!).
This consensus mechanism keeps the Ethereum network running by facilitating transfers, even those involving its native cryptocurrency, ETH or ERC-20 tokens like $USDT or $DOGE. However, as mentioned, this model is highly energy-intensive. Using electricity-hungry hardware (such as dedicated mining rigs or ASICS), Miners compete to solve complex mathematical puzzles and earn rewards through the mining process.
The system is designed in such an energy-dependent way to prevent malicious users from ever being able to hijack the hashing (verification) power of blockchain, as this would mean controlling over 50% of all energy used to power all mining equipment in the network (which is nearly impossible or very costly). As a result, with all this mining power, Ethereum is estimated to consume as much electricity as the entire country of the Netherlands in a year.
Are NFTs really to blame?
Pinpointing NFTs as responsible for further damaging the planet is like calculating an individual share of emissions on a plane flight. Whether or not NFTs get created or transacted, miners would still eat up tons of energy to keep the ‘mother’ ecosystem running anyway. Plus, NFTs transactions measured by ERC-721 and ERC-1155 contracts are a relatively small chunk of Ethereum’s network activity. So are NFTs the real culprit here?
Some say they are. As more NFT transactions need to be validated, the increased network usage sends a positive macro signal to miners, who will increase their use of carbon-emitting, energy-guzzling mining machines to earn more rewards. Thus, leading to greater environmental impact.
Another critical point in this argument; does avoiding NFTs help solve global climate change when two-thirds of the greenhouse gas emissions or around 71% of all emissions come from just 90-100 companies. It’s like trying to empty the ocean with pale. The global banking industry uses about 263 TWh of energy per year (2x that of Ethereum), but we don’t see anyone making as big of a fuss.
But, if we pull back the curtains on most decarbonisation debates, it often reveals that the natural compromise lies where society draws the line and whether we are willing to accept the carbon footprint relative to the benefits created. As much as NFTs harm the environment in their current state, there is a greener future ahead, much like how streaming video today has improved its climate impact, thanks to huge efficiency improvements in data centres, networks and devices.
NFTs can go ”greener”
With energy-intensity halting (potentially) the mass adoption of NFTs, there is an increasing number of options to change how things currently work. Less planet-harming blockchains are always the first option. It’s become a trend to use alternative layer 1, smart-contract blockchains like Flow, Polygon and Tezos for NFT transactions. Their advantage? The proof-of-stake (PoS) system.
They are specifically designed to remove energy and electricity as network inputs and replaces them with locked-up cryptocurrencies, a more sustainable way to select validators for high volumes of NFT transactions. In 2021, NFT transactions on Tezos were found to be 35,000x more energy-efficient than Ethereum, further solidifying the ecological high-ground of PoS blockchains.
With that said, Ethereum has long planned to shift towards a greener, PoS system, and is slowly progressing, to say the least. It’s been years, but many are still hopeful that the network electricity consumption will “literally over a day or overnight drop to almost zero”. After the upgrades, the utopian scenario is that all transactions on Ethereum, including those with NFTs, will be carbon-free.
While the holy-grail upgrades remain work-in-progress, there are immediate remedies to PoW blockchains. Companies like CurrencyWorks are powering energy-intense processes with renewable and self-sustainable systems. While blockchains run on eco-friendly inputs, many say it’s not a perfect solution because it increases the pressure on existing grids and takes away renewable energy sources that could otherwise be used to power homes and cities.
However, we believe that the mission of reducing intermediaries and empowering digital ownership will bring innovations in mining through the use of more “reliable and clean” energy.
The crypto community worships alternatives such as “layer 2s or L2s” that reduce network electricity consumption by bundling and taking transactions off-chain — away from the energy-intensive PoW processes. For example, StarkWare’s solution uses ZK rollups to pack more information (over 1 million NFTs) into each block, reducing energy use by 200-200,000 times. This idea of “fitting more people into an airplane flight” has attracted customers like Marvel and Disney as well as US$ 50 million in its Series C funding round. (You can find out more about VC funding in the NFT space in our other artiNFT Gold Rush: What’s on the VC’s mind?cle.)
With new collections released every day, projects with significant carbon footprints are often ousted by the community, forcing NFT users and artists to do their part in “saving the planet”. While there are already artists-led efforts that reward solutions that improve energy efficiency in the NFT economy, others contribute by creating guides on being more ecological with NFTs, including using only sustainable marketplaces, bridging and lazy minting.
Closing Thoughts
There is so much more we can still do today, and I think NFT marketplaces should take the lead. With all the social good that the NFT world is doing, behemoths like OpenSea should at least implement a donation system that donates a percentage of sales to a carbon-zero charity or one that focuses on reducing global warming emissions.
But despite the unsustainable nature of NFTs, the Ethereum network or cryptocurrencies in general, I argue that it is nothing compared to the environmental impact caused by the Amazon(s) of the world. While shifting the blame is not an answer to any problem, they have to start taking responsibility for this systemic concern.
NFTs are in their infancy stage. Let’s not “dismiss such a revolutionary technology based on 1st gen use”. It’s only fair that we give the brilliant NFT people time to think, experiment and create the leaner, greener NFTs that the world deserves. And hopefully, in time to come, they will be the catalyst that reshapes the global adoption of digital ownership and energy.