This is a question that has come up regularly since the end of 2020 when Memo Akten published the first research on the carbon emissions of NFTs. Yes, NFTs consume electricity to exist. On blockchains like Ethereum or Bitcoin, this consumption is higher than on others by design.
In December 2021, if all actions are carried out on-chain, here is an estimate of the carbon emissions of NFTs:
Although some platforms are updating their smart contracts to reduce the need for gas, this methodology would be adapted if blocks were generated for each transaction sent on the blockchain. This is not the case, blocks are generated automatically every 13 seconds or so, whether they contain transactions or not. This calculation method, therefore, makes it possible to make users aware of their carbon footprint but many questions remain unanswered.
The goal for a crypto miner is to be profitable. To achieve this, he will have to look for a source of electricity that is inexpensive as well as mining equipment that consumes less and is more efficient. It is regularly Bitcoin that is singled out for the ecological impact of its ‘Proof of Work’ model.
In March 2022, Coindesk went to meet with the world’s largest crypto mining farms to find out what responses they have given to the climate emergency. The conclusion is clear: all farms seek to use as much renewable energy as possible, regularly renew their machine park, and reuse as much as possible of the heat released by mining.
For Ethereum, all it takes is a graphics card to participate in block mining. This allows more people to participate in securing the network but it also makes locator identification more complicated.
The most important question about electricity consumption & digital pollution is to know where energy production comes from. If miners use a VPN, they will be mistakenly counted in another country on the globe. If they use a clean energy source but are located in a country that mainly uses electricity created from fossil fuels, they will be included in the country’s statistics without taking into account its particularity.
Other blockchains and layer 2 solutions exist and are less energy intensive, but are more centralized and therefore more vulnerable to censorship or ledger changes.
Faced with this problem of information trust, blockchain and NFTs have a role to play in the transmission of data relating to the various miners. But for that, it requires an incensurable blockchain.
So the answer to the question “Are NFT bad for the environment?” is: it depends on the blockchain used. We would have liked to give a more precise answer, but this requires more scientific research on the subject. Bitcoin’s power consumption is getting better and better documented and its consensus system will not change.
Regarding Ethereum, a transition to ‘Proof of Stake’ has been initiated in 2020 with “The Beacon Chain“. This was the first step toward ETH2 which will no longer use ‘Proof of Work’ to work. Any ‘Proof of Stake’ blockchain uses 99% less energy. It will be a few more years before this update ends (announced for 2023).
In the meantime, there are other blockchains and Layer 2 solutions that support more transactions and don’t require energy-intensive mining machines to operate.
Memo Akten is right on one point: it is time to think about the use we make of the blockchain, even more for those who use the ‘Proof of Work’ because they allow the best decentralization and security of the information hosted on it. The more centralized a blockchain is, the more it looks like a centralized database. The questions to be decided for the future are therefore:
Ecological change requires first and foremost social change. These issues must be discussed by as many people as possible so that a common solution can be found… and make consensus!
More data on the Ethereum traffic & emissions: