They are referred to as non-fungible because they are not interchangeable; thus, they cannot be exchanged for other items because of their unique features.
NFTs includes anything digital, ranging from: drawings, animated GIFs, songs, or items in video games and so on. It can either be one-of-a-kind, like a real-life painting or one copy of many: sports trading cards for instance, or something like Twitter CEO Jack Dorsey’s first tweet etc.
NFTs are Ethereum-based tokens that are part of the Ethereum block chain, hence platforms that sell NFTs typically require buyers to use Ethereum to make their purchases.
Carbon Footprint on the other hand, simply refers to the amount of carbon dioxide (CO2) emissions associated with all the activities of a person or other entities (e.g., building, corporation, country, etc.).
It comprises direct emissions, such as those emanating from fossil fuel combustion in manufacturing, heating, and transportation; as well as emission required for the generation of electricity. In addition, the carbon footprint concept also includes the emissions of other greenhouse gases such as methane, nitrous oxide, or chlorofluorocarbons (CFCs).
Sometimes ago, an artist named Memo Akten created a website (which was taken down afterwards) where 18,000 NFTs were analysed. He discovered that the average NFT has a carbon footprint equivalent to 211 kg of CO2. Which is equivalent to a EUs resident monthly electric power consumption or like driving 1,000 km, or taking a flight from London to Rome, according to a Swiss art advisor, Sascha Gianella.
Gianella further stated that: “From an art world perspective, it would be great to see crypto art and NFT platforms publicly and transparently address sustainability issues and commit to subsidizing the ecological footprint and donating to carbon credits.”
Greater demand and more NFT transactions could lead to more profit for miners thereby increasing emission. The underlying argument whether the use of NFTs actually increases the value of Ethereum, hence triggering an intensive energy-hungry, mining for and multiplying the number of machines miners use. The increase in number of machine use often means more pollution.
According to the Digiconomist website, a single Ethereum transaction consumes over 70.32 kWh, enough to power one U.S. household for two and half days; a value equivalent to a carbon footprint of around 34 Kg of carbon dioxide (CO2). Compared with conventional sources of consumption, this carbon footprint is equivalent to watching over 5,700hours of YouTube video or above 76,000 credit card transactions.
“With electricity consumption of cryptocurrencies being more than several countries, the rush towards NFTs has further increased this issue”, says Devesh Mamtani, an NFT expert at Century Financial in the UAE. “NFTs’ computation requirements are notably higher due to various stages involved including: minting, bidding, selling and transferring process,” he says, noting the energy cost of minting an NFT on Ethereum is 332 kWh.
The NFT market growth and the rise in energy consumption are even more disturbing considering Sedlmeir’s claim that “the energy consumption of Bitcoin increased by three to four times and Ethereum by about ten times in the last year”.
This issue of NFT and Carbon related emission is crucial especially at a time when environmentalists and climate experts have been warning about the unprecedented rise in temperature, sea level, species extinction, severe weather events and other attributes of global warming.
According to the Verge; when someone makes, buys, or sells an NFT via Ethereum, they’re responsible for some of the emissions generated by those miners. It is arguable whether NFTs are significantly increasing emissions from Ethereum or if they’re just taking on responsibility for emissions that would have been generated by miners regardless. NFTs are relatively minor portion of all Ethereum transactions.
Carbon emissions are more literally connected to the mining process than the minting process. Carbon calculators like Offsetra’s don’t measure a discreet release of CO2 for an NFT; instead, an estimate of the total infrastructure of Ethereum a marketplace or artist might be responsible for. Elaborating on this, Bonneau stated that: “We believe that as users of the Ethereum network, we’re all benefiting from it and therefore we should take responsibility for a portion of the emissions from that network.”
MorningStar in their post stated that: “a good way to tackle the environmental impact of NFTs is to secure a commitment from collectors, developers, artists and investors to explore and move to more sustainable alternatives other than the Ethereum block chain. If there were to be a way forward, it would be to create a system where the mining process can be somehow tracked back to a company that makes its energy consumption transparent” asserts Gianella.
Bitcoin, Ethereum and many other cryptocurrencies are at the moment based on Proof of Work (POW) or mining, which are regarded as being energy inefficient as compared to Proof of Stake (POS), but this will change, assures UK-based
Viktor Prokopenya; founder of trading platform: capital.com and currency.com.
“We are moving from 'proof of work' to 'proof of stake' technology,” says Prokopenya, calling it “the Tesla of cryptocurrency,” in terms of emissions.
Pointing to other areas of modern technology regarding energy efficiency, he asserts that “Machine learning and AI also consume lots of energy, but this does not mean they are bad, adding that zero-emission technology is just a few years away”.
It is hoped that as speculated, Ethereum 2.0 which would be based on proof of stake, will arrive within the next few years, immensely reducing the network’s energy consumption as well as its impact on the environment.