NFTs or Non-Fungible Tokens have been a revelation in the crypto industry. They have allowed artists to bring their work to millions of people around the world with complete ease.
NFTs have also found utility beyond art; brands have used them to provide customers with exclusive access to events, products and experiences. As such, these digital assets have become popular in the last two years.
However, as amazing as they are, NFTs present broadcasters and users with one big problem. While NFTs themselves do not cause any pollution or damage to the environment, the process of creating them can.
So, this World Environment Day, let’s delve a little deeper into the problem, examine one promising solution – green NFTs – and find out if they can really make a difference.
Most NFTs are primarily minted on work-proof (PoW) blockchains such as Ethereum. These blockchains require enormous amounts of computing power for their mining process.
Miners need to use powerful hardware that consumes vast amounts of electricity. Every operation that swallows electricity also leaves a big carbon footprint. That’s why PoW blockchains are constantly receiving criticism from lawmakers and environmentalists.
In addition, on PoW blockchains, miners always run to be the fastest among their peers. Their mining rewards depend on how quickly they can process transactions. The transaction data they validate is grouped into blocks and added to the blockchain.
The more blocks they complete, the higher their reward. Thus, miners are encouraged to constantly upgrade / increase their mining power. This leads to increased energy consumption and a larger carbon footprint.
It is the same computing power that is deployed in the creation of new NFTs. According to the Ethereum Energy Consumption Index, each NFT created on the Ethereum blockchain consumes 223.85 kilowatt-hours of electricity. That’s the equivalent of more than seven days of power consumed by an average American household.
Green NFTs are a possible solution
Precisely, green NFTs could provide a solution to this problem. The best part is that they are so simple. They’re not some special digital assets, they’re just NFTs that are coined on Proof-of-Stake (PoS) blockchains.
PoS blockchains do not require miners to devote massive amounts of computing power. Instead, they ask miners to pledge cryptocurrency to the network to qualify as transaction validators.
Therefore, miners require very little computing power to control transactions. Also, they can promise more crypto to increase their chances of becoming a validator. This eliminates the whole rat race adding more computing power and solving complex cryptic puzzles.
Companies like OneOf and Serenade use the Tezos and Polygon blockchains to make NFTs because they are extremely energy efficient. The Tezos blockchain only leaves an annual carbon footprint equivalent to that of 17 average people. OneOf’s website claims that Tezos uses two million times less power than any other blockchain for NFT.
But will green NFTs really work?
Therefore, when the World Wide Fund for Nature (WWF) announced plans for an NFT collection operated by Polygon, it was met with widespread public objection. Even though the project planned to raise funds for nature conservation efforts, it met with severe criticism; some even went so far as to call it “bad,” “crazy,” and “unbelievable.”
This is despite the WWF reiterating that “every transaction on Polygon produces only 0.206587559 grams of CO2”.
Therefore, the effectiveness of using Green NFTs is still under debate. However, one thing is certain – they are certainly a welcome transition.
If more artists and brands transitioned to Green NFTs, the environmental impact of these digital assets could be greatly reduced. And at this point, where the whole world is looking down the barrel of a climate crisis, every step, no matter how small, is a step in the right direction.
(Edited by: Anand Singha)