A new crypto relative has arisen just as we’re finally getting a handle on what cryptocurrencies are and how they work.
Tokens that aren’t fungible should be entered (or NFTs). Unfortunately, NFTs have a negative influence on the environment. But before we get into that, let’s start with NFTs 101.
Simply said, NFTs are one-of-a-kind digital tokens that grant someone ownership of a work of art, such as a film, song, or photograph, through a series of computer transactions.
Traditional cryptocurrencies, such as Bitcoin, are interchangeable and interchangeable.
NFTs, on the other hand, are one-of-a-kind digital works of art. (It’s like how you can easily exchange a $20 bill for two tens but not a Picasso for a Monet.)
Why NFTs Are Bad For The Environment? NFT Impacts On Environment
NFTs and their cryptocurrency counterparts have one thing in common: they both consume a lot of energy.
Bitcoin mining already emits 38 million tons of CO2 per year, which is more than Slovakia’s carbon footprint.
Bitcoin emissions alone, according to a 2018 study published in Nature Climate Change, may boost Earth’s temperature by two degrees.
“Bitcoin is a proof-of-work blockchain, which means it secures the blockchain and verifies transactions using proof-of-work (PoW) consensus procedures. According to Susanne Köhler, a Ph.D. fellow and sustainable blockchain technology researcher at Aalborg University in Denmark, “PoW means that miners compete against each other to mine a block.”
“To win in these challenges, specialized computers create trillions of guesses every second.” It’s what you’d call a “brute-force” approach. This is what necessitates a significant amount of electricity.”
To put this in context, Bitcoin’s daily carbon footprint is similar to watching 57,000 hours of YouTube videos. It also utilizes the same amount of electricity on a daily basis that an ordinary American household does over the course of 25 days.
NFTs have a similar environmental impact because they require energy-intensive computer transactions to authenticate and sell the art.
“To produce NFTs, to bid, to pay for the NFT after winning the bid, or to transfer ownership,” Köhler explains, “transactions on a blockchain are required.”
“So you might link the number of transactions NFTs require to the amount of electricity they consume, as well as their environmental imprint.”
The connected impact of NFTs grows as interest in them grows and more individuals buy and sell them.”
Miners are often driven to use inexpensive electricity to maximize profits, according to Köhler, therefore the energy needed for these transactions is also a concern (like fossil fuels).
There’s also the issue of the technology used: “Hardware production and recycling only accounts for a small percentage,” she adds.
“However, employing specialist computers for mining, which can become unprofitable in a few of years, generates a lot of e-waste.”
Can NFTs Ever Be Sustainable?
While it’s evident that NFTs have a significant environmental impact right now, Köhler believes there are some ways to make them more sustainable in the future.
Begin by decreasing the impact of the blockchain that is currently in use.
“The majority of NFTs run on Ethereum, a proof-of-work blockchain. To safeguard their blockchain and validate transactions, Ethereum is switching from proof-of-work to proof-of-stake, which will make NFTs more sustainable,” she explains.
“However, this is not a simple task, and it will take time.” This might also be addressed by using a new (non-PoW) blockchain.”
A second option for NFTs to become more sustainable is to reduce the number of blockchain transactions they require.
“This can be accomplished by constructing on ‘layer 2,’ which means that not every transaction needs to be recorded on the blockchain,” Köhler explains.
“An auction, for example, may be held totally off-chain on layer 2 and then published to the blockchain in batches. This is a solution that can be put in place more quickly.”
However, skeptics argue that, in a world where fossil fuels still account for the majority of energy generation, cryptocurrencies and NFTs will continue to contribute to global warming unless action is taken soon.