Are NFTs bad for the environment?
Do Non Fungible Tokens (NFTs) harm the environment? If so, how?
By now you’ve probably heard about NFTs (Non-Fungible Tokens) and how they impact our environment, or how they sell for ridiculous amounts of money. NFTs themselves don’t directly have any effect on our environment, but how they are produced is linked to having an impact on our environment.
So technically, no, NFTs are not bad for the environment. How they are created, it has some impact.
A majority of NFTs are traded on the Ethereum network which means using the proof-of-work operating method. This means each transaction uses a mining process to approve and confirm the transaction. This method uses a significant amount of electricity, which explains why some view it harmful to the environment. Briefly, this is how the process works :
- Ethereum blockchain uses proof-of-work that confirms transactions in ‘blocks’
- Computer networks solve complex algorithms for approval to confirm the ‘block
- While solving these algorithms the network uses high energy in hopes of receiving the gas fees from the confirmed block
The people who do this are called miners. They do this on the Ethereum blockchain with or without NFT’s, because there will always be blocks to solve and transactions to confirm. Keep reading to find out what this means for the environment and alternatives for a greener future!
NFTs and their impact on the environment
We know NFTs themselves don’t affect the environment, but when exactly in their lifespan does it have an impact? Uploading a digital file to an NFT marketplace creates an NFT (minting).
This is the first moment to have an impact on the environment. After it is minted and listed on a marketplace the next scenario where extensive energy will be used is if the NFT is either bought or transferred.
Lucky for collectors, an NFT that simply sits in your digital wallet has NO effect on our environment at all. HODL and wave fellas.
How much energy do NFTs use?
It has been reported that a single NFT transaction on the Ethereum platform emits almost 150 kilograms of carbon dioxide. This is equivalent to 331,056 Visa transactions, 24,895 hours of watching YouTube, or the electricity used by an average U.S. household over 9 days.
I know what you're thinking, this doesn't like good news for mother nature.
HOWEVER, on September 15th 2022 Ethereum switched to a Proof-of-stake system meaning SIGNIFICANTLY less electricity used with NFTs and the Ethereum blockchain. It was been reported that NFT transactions require 99% less energy after the switch
Can NFTs use less energy?
Yes!! Ethereum and NFTs are now much more environmentally friendly. (Sorry miners) The merge from proof-of-work to proof-of-stake is expected to reduce energy consumption to the equivalent of a TV running for 20 minutes.
That sounds a lot better than powering a household for 9 days. There are also other blockchains that use proof-of-stake. Some of these blockchains include Solana, Tezos, and Cardano.
However, a majority (roughly 80%) of NFTs live on the Ethereum blockchain, and with the recent merge to proof-of-stake we can all let out a sigh of relief.
You may not like NFTs or even fully understand them, but hating on them because of environment concerns simply isn’t fair. Sure, the proof-of-work system in the past didn’t help their case but the merge to proof-of-stake was a huge step.
Now you and I can trade NFTs all day long with minimal impact on our planet.
There are things we do in everyday life that likely use more energy than a single transfer of an NFT. So unless you have no TV’s or electronics and ride a bike everywhere … please stop hating on NFTs and calling them scams.