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  • Writer's pictureKatie Babson

NFTs and the Climate Controversy


NFTs have taken over the internet, serving as digital assets that offer creators and consumers unique opportunities regarding monetization and ownership. However, there are growing concerns regarding NFTs’ impact on exacerbating climate change when they are being created and sold. However, new technology and updated blockchain processes have started offering more environmentally sustainable alternatives to current NFTs.

Non-fungible tokens, or NFTs, have dominated the internet, blowing up on spaces like Twitter and Ethereum. NFTs are digital assets that can represent items such as art, music, GIFs, and virtual avatars. Essentially, NFTs are like physical collectors’ items, just in a digital format where the holder receives online verification for authenticity. Typically, NFTs are purchased online through cryptocurrency and exist on a “blockchain”, which is a public archive that records all transactions made with cryptocurrency. However, there are mounting concerns regarding NFT energy consumption. Although NFTs do not consume energy when stored, creating and selling them uses energy on the scale of a small country.

NFTs are appealing in their ability to offer content creators a unique opportunity to monetize their products. Rather than selling through a third party, creators and companies can sell their content directly to the consumer as an NFT. This allows sellers to save more profits and program in royalties to receive a percentage of sales whenever the NFT is sold again. As a result, NFTs can be profitable, with headline-grabbing sales garnering attention across social media. For example, in 2021, an animated GIF of Nyan Cat sold for almost $590,000 in a blockchain sale.

Another appeal of selling on the blockchain is the new form of ownership it provides. While NFTs are mocked because they are easily screenshotted and copied, the holder ultimately retains a verified token of ownership through digital evidence. But the hectic mania surrounding NFTs has combined the most gaudy and greedy aspects of collectibles and blockchain platforms. This is of special concern when looking at the dramatic impact NFTs have on the environment and their propensity to exacerbate climate change.

A major problem with tracking NFT ownership through the blockchain is the enormous energy consumption required when made through the “proof-of-work” model. This model consists of miners racing to solve mathematical problems batched into a “block”, where the first miner to solve it is awarded some amount of the currency and/or transaction fees. Many major marketplaces for NFTs conduct their sales through Ethereum using a process called “mining”. Blockchain technology uses mining to maintain a secure record of cryptocurrency and NFT transactions. It involves a network of computers using advanced cryptography that determines whether transactions are valid. Essentially, this is a process that verifies and includes new blockchain transactions through the proof-of-work model.

But exactly how NFT energy consumption translates to carbon emissions is debated. According to one estimate, creating an NFT has an environmental impact of over 200 kilograms of carbon, which is equivalent to driving 500 miles in an average American gas-powered car. In addition, researchers at Cambridge University estimate that mining Bitcoin alone uses more annual energy usage than the entire nation of Norway did in 2020. Within just the U.S., 40 billion pounds of carbon dioxide were produced in 2020 from solely Bitcoin mining. A paper published in the journal Nature Communications even went so far as to warn that cryptomining in China could undercut the entire nation’s proposed climate goals. Overall, these figures highlight legitimate concerns surrounding the role NFTs play in promoting climate change through the massive amount of computative energy consumed.

Nonetheless, crypto-bros and NFT adopters have protested these concerns. A popular argument proposed is based on the analogy that blockchains are like a train constantly running, with every transaction serving as a seat on the train. Thus, they argue, just as a train would keep running regardless of the number of passengers, NFTs themselves do not contribute to emissions. However, Alex de Vries, a Dutch data scientist who tracks the sustainability of digital currencies through his website Digiconomist, objects to this. In rebutting the argument proposed by NFT supporters, he argues that, yes, if one person did not take a train, there would not be any impact on carbon emissions. However, if a large number of people use trains, there would be more emissions overall. The same is true for NFTs, if there is high interaction on blockchains, there will be an increase in emissions because more people are using them.

Regarding cryptocurrency and NFT platforms, some platforms have responded to the climate change concerns NFTs pose by vowing to invest in carbon offsets and go carbon neutral. But this has been met with incredulity by many people, who contend that paying for carbon offsets is ineffective at addressing the climate issue. Therefore, this response by platforms neglects to implement effective changes in their practices to stop contributing to climate change.

Other platforms, including Ethereum, have stated they plan to reduce their carbon footprint by moving to a model called “proof of stake”. This model employs a network of validators who “stake” their own crypto in exchange for an opportunity to validate new transactions, update the blockchain, and earn a reward. Such a model reduces computational work, which uses less processing power to verify transactions and cuts carbon emissions. This system has already been adopted by smaller NFT platforms. However, since Ethereum announced its plan to shift to proof of stake chains a few years ago, nothing has definitively changed. Although a version of Ethereum’s proof-of-stake has been online since late 2020, it is difficult to merge it with the main platform. Because Ethereum has a network that secures hundreds of billions of dollars in value, which places the network at a high risk of failure. It is essential to ensure all users accessing the platform run the same software, otherwise, the blockchain may split into multiple chains. Nonetheless, switching to an alternative model does not guarantee a solution to climate change-related hazards resulting from NFTs transactions.

Ultimately, NFTs have been speculated to be a bubble, poised to pop like the dot-com boom or Beanie Babies, with the Wall Street Journal reporting a decline upwards of 90% in NFT sales. Regardless, NFTs persist in pop culture and continue to consume massive amounts of fossil fuels. In an effort to address climate concerns, new technology and updated blockchain processes have begun offering more eco-conscious alternatives to current NFTs. As potential solutions continue to be developed, advocates against energy-intensive NFTs ought to continue protesting cryptocurrencies using dirty energy. It is also important to support efforts made to develop new methods in making NFTs sustainable, such as the artist-led effort Artnome. Lastly, if you are planning on purchasing an NFT, identify blockchains promoting energy-efficient NFTs, such as platforms like Solana, Algorand, Cardano, and Tezos.

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