NFTs have increased in popularity in 2022 with everything from art and music to tweets and digital perfume available to purchase through the new marketplace. But with an increase in popularity comes increased scrutiny on their environmental impact. How eco-friendly are NFTs and what kind of impact have they already had? Keep reading as we breakdown NFTs and if they have a place in a sustainable world going forward.
What are NFTs?
NFT stands for non-fungible token, a digital file representing real-life assets like art, music, games, videos – typically a unique item. NFTs are bought and sold online via an NFT marketplace, generally using cryptocurrency like Etherum. NFTs are big business these days valued at 15.7 billion USD in 2021 and projected to reach 122.43 billion by 2028.
How Much Energy do NFTs Use?
According to memoakten, an average single NFT transaction generates 100-500kg CO2. In comparison, according to digiconimist, an average single Ethereum transaction generates 148 kg CO2 and an average Bitcoin transaction generates 1210 kg CO2.
In relative terms, according to the EPA, 100kg of CO2 is equivalent to driving 248 miles and charging 12,164 smartphones. Another study compared one NFT transaction to two months worth of electricity usage for an EU resident. So it’s fair to say NFTs use a considerable amount of energy, especially when there’s 3.200 NFT transactions each day.
Why are NFTs Bad for the Environment?
People buy NFTs using cryptocurrency like Ethereum. Ethereum and other cryptocurrencies like Bitcoin require energy intensive resources to mint and transact. Currently, the majority of energy used for cryptocurrency comes from the fossil fuel industry, only 39% comes from renewable sources. That being said, with the falling cost of renewable energy sources, cryptocurrency miners are expected to use this energy source more in the future.
How Can we Make NFTs More Eco-Friendly?
1. Eco-Friendly Blockchains
Most NFTs are minted on the Ethereum blockchain which currently uses 112 TWh of energy per year. For comparison, this is similar to how much the Netherlands uses. However, more eco-friendly blockchains like Solana (SOL), Tezos (XTZ) and Algorand (ALGO) also mint NFTs. As part of their sustainability efforts, Solana claims to use as little energy as two Google searches. Eco-conscious NFT buyers should research and understand the different blockchains and marketplaces before making an investment.
2. Ethereum Moving to Proof-of-Stake
Ethereum, the cryptocurrency that most NFTs use, is moving to Proof-of-stake (PoS) in 2022. Ethereum currently uses Proof-of-work (PoW) requiring miners to use energy intensive equipment and practices to add to the chain. By moving away from this protocol, Ethereum aims to reduce the amount of energy used by 99.5%, making it a much more eco-friendly cryptocurrency.
Read More: What’s the Most Eco-Friendly Cryptocurrency?.
3. Clean Energy Machines
Currently, the majority of computers mining cryptocurrency and minting NFTs run using fossil fuel based energy. By switching this energy consumption to a renewable energy source, NFTs become more eco-friendly overall. In addition to using more renewable energy, NFTs can help fund renewable energy efforts globally. Nyukia (Nyukiaverse) is a metaverse selling the HaPeeBee NFT helping underserved populations have access to clean energy, promote environmental protection, and accelerate the growth of renewable energy.
4. Lazy Minting
Most marketplaces allow a creator to upload their NFT before they go on sale. This process requires energy and takes up storage space for assets that don’t have a guaranteed buyer. Without a buyer or demand, they could end up sitting on the blockchain and consuming energy for a long time. Lazy minting delays upload until someone purchases the NFT. This practice could reduce the NFTs carbon footprint by approx. 2x.
Sustayn is designed to present the most useful recommendations for environmentally friendly approaches and items. We update links when possible, but note that links can be broken and pricing, where noted, can be subject to change.
