Non-fungible tokens (NFTs) have been in the news a lot lately, with sky-high prices paid for these digital pieces of art. While the art world has gotten itself rather excited about NFTs, and the general public has scrambled to understand what the heck they are, a small but growing contingent rushed to highlight why NFTs are a climate nightmare.
What are NFTs?
An NFT is a piece of digital artwork, whether a picture, video clip, GIF, or some other digital creation deemed to have artistic merit and that is authenticated as one of a kind. This artwork or digital asset is encoded and stored on a blockchain (a virtual ledger), just like cryptocurrencies, meaning it is permanently trackable. Creators use these digital platforms to ‘mint’ their work, i.e., to create a digital asset that can then be traded or sold.
The non-fungible part of an NFT comes from the idea that the artwork isn’t simply a like for like trade. So, while it’s well understood that we can trade a dollar for a dollar and still have the same ‘value’ in the end, doing the same thing with an NFT could be akin to trading a grade school fingerpainting for an original work by Van Gogh, or trading a print of the Van Gogh for the original. Yes, they’re both ‘art’, but they’re non fungible because you can’t simply exchange one for the other and maintain the same value.
Decentralized digital networks allow creators to track ownership and rights, meaning artists can encode a CryptoArtwork as the original. For instance, if you’re a photographer, you could add a photo to the blockchain as an artwork and because the virtual ledger is publicly available and a permanent record, you’d be able to maintain ownership (or sell ownership) and see when and where the photo is used and get paid for it (ideally).
Technically, then, the NFT is actually the certificate of authenticity behind the artwork, not the CryptoArt itself.
How do artists create CryptoArt and NFTs?
Not all cryptocurrency networks are able to handle NFTs as they’re purely oriented towards a single asset, such as bitcoins. Others, such as Ethereum, are much broader in scope and allow developers to build apps on the network. This versatility also allows artists to create assets. So far, Ethereum is the go-to platform for the burgeoning world of digital art, but other decentralized networks can also handle NFTs, including Algorand, Tezos, Polkadot, and Hedera Hashgraph.
This new world of digital art sales is a real boon to smaller artists and non-traditional artists, allowing artworks to be sold by independent creators and even allowing artists to set a royalty, whereby if the piece is sold originally for $100 but subsequently sells at $100,000, the original artist gets a portion of that later sale (thanks to all the sales being infinitely trackable). This is a new way of working for the art world, where savvy collectors can scoop up original artwork by an artist for very little money and then make a huge profit if that artist later becomes famous, without the artist getting any compensation based on the later sale price.
So far so good, but because NFTs rely on blockchains, and the computer power behind the blockchain, there are increasing concerns that the market for NFTs is too energy-intensive and environmentally problematic to be sustainable.
How much energy do NFTs use?
Just as it’s difficult to calculate the exact energy use of any given cryptocurrency network, it’s similarly hard to establish a clear figure for NFTs. That said, a now defunct website called CryptoArt.wtf (shut down in March, 2021, by the founders due to harassment and abuse) aimed to assess the environmental impact of NFTs. The site’s authors calculated the average carbon footprint of a single NFT as equivalent to that of a person living in the European Union for a month, or around 100 kg of CO2.
Other estimates suggest this might be closer to 200 kg of CO2, which is the equivalent of driving 500 miles in a gas-powered car in the US. And one calculation suggests that an edition of 100 works was responsible for more than 10 tons of CO2, or more than the annual footprint of a person living in the EU.
One of the biggest NFT sales so far is of a work by Beeple called Everydays: The First 5000 Days. This NFT sold for $69 million through Christies auction house earlier in 2021, but Beeple quickly acknowledged the climate impact of NFTs and pledged to make his artwork carbon neutral or carbon negative by investing in renewable energy and carbon capture projects.
Indeed, a growing number of artists have sworn off NFTs, despite the significant sums of money they could make selling these digital pieces. One artist publicly cancelled his planned sale of 300 digital pieces after calculating that the sale would have used up the same amount of energy as two decades of average consumption for a person in the EU.
The democratizing art app ArtStation also cancelled a planned drop of NFTs after a rapid backlash over the environmental footprint of the project, which included NFTs from popular artists on the platform. This backlash, while merited on environmental grounds, has many smaller artists somewhat irked, given that the technology behind NFTs looked set to finally put artists back in the driver’s seat rather than at the mercy of art dealers.
Which leads to the question…
Can NFTs be sustainable?
To make NFTs less environmentally terrible, there have been calls for PoW blockchains such as Bitcoin to take greater steps to power that network using renewable energy. Crackdowns on energy-guzzling server farms powering the Bitcoin network in Iran (where they just banned Bitcoin mining for four months after blackouts) and China are already underway. One paper published in the journal Nature Communications even warned recently that cryptomining in China could sabotage the country’s climate change strategy.
The good news is that many cryptocurrency miners themselves want to use more renewable energy sources and switch away from coal, oil, and natural gas. The bad news is that as more people become interested in cryptocurrencies and NFTs, there’s more competition on these PoW blockchains, making mining even less energy efficient and more environmentally damaging, unless the networks are powered by renewables. Even then, the infrastructure needed to set up the mining operations requires massive amounts of resources, including precious metals and plastics for hardware.
Bitcoin isn’t really the major player for NFTs though. Instead, Ethereum quickly became the main platform for NFTs, thanks to the versatility of this network for creating digital apps and entities. Unfortunately, Ethereum is an energy intensive network currently still operating on a proof-of-work (PoW) algorithm (there are plans afoot to change that, but it’s been very slow going).
Fortunately, while we wait for full implementation of Ethereum 2.0, there are other ways to make NFTs more sustainable. As mentioned, individual artists (or buyers or marketplaces) could take steps to offset emissions associated with the sale of these artworks. Creators could also favor building and selling NFTs on less energy intensive and more sustainable cryptocurrency networks that operate using a proof-of-stake or proof-of-storage algorithm.
Some more sustainable PoS networks being used to create NFTs include Algorand, Tezos, Polkadot, and Hedera Hashgraph. The Stellar network is also being used for more sustainable NFTs.
Finally, I’d strongly recommend checking out the Lovada marketplace for digital art. This organization uses the more eco-friendly blockchain Cardano for NFTs, as well as using Google Cloud Platform (run on 100% renewable energy sources) for their hosting. The entire Lovada platform has zero net emissions, and the founders seem genuinely interested in creating a safe, sustainable space for artists to showcase their CryptoArt.
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