Because NFTs rely on the blockchain to function, their sudden rise in popularity has created the same challenge the initial rise in cryptocurrency itself did: blockchain transactions require a lot of energy to process.
As thousands of NFT creations and trades begin to take place, that really takes a toll. But how much of a toll?
Devesh Mamtani, an NFT specialist at Century Financial, says that the computational requirements for NFTs are “notably higher due to various stages involved including minting, bidding, and selling,” as well as commenting that the typical energy cost of simply minting an NFT on Ethereum is 332kWh.
NFT’s Effects On The Environment
Ok, so stating that it takes 332kWh to mint an NFT above may sound like a lot, but we need some context. What is the tangible effect of that on the environment?
According to SmarterHouse.org, every kilowatt hour of energy expended releases a pound of carbon dioxide into the environment. Carbon dioxide is the leading contributor to global warming and creates a significant carbon footprint.
And that’s only looking at CO2 usage. Depending on the types of power production any given area uses, those extra kilowatt hours may mean burning fuels like coal or oil — both of which throw all kinds of toxic chemicals into the air.
Excessive pollution from coal plants has been positively linked to lung conditions like bronchitis and asthma, heart attacks and arrhythmia, and even strokes.
This is not meant as an argument against NFTs as a technology. But it’s certainly important to acknowledge the current role NFTs do have on the environment around us.
The blockchain as a whole right now commands massive power requirements, compared to most other aspects of our lives. Few other singular actions we take day to day even come close to using similar amounts of power. From this it’s pretty clear that we either need newer, cleaner ways of producing huge amounts of power, or we need to make the blockchain dramatically more energy efficient.
NFT’s Environmental Effects Compared To Other Activities
The EPA’s website has a handy tool where you can input various forms of energy usage and it will give you equivalents for other activities.
In this case, we can plug in that 332kWh of energy usage from earlier and see that it’s an equivalent amount of emissions to the following:
- Driving 591 miles in a typical car (or ~26.5 gallons of gas consumed by cars)
- 260 pounds of burned coal
- 9.6 of those propane canisters we use for home barbeques
- Charging up 28,620 smartphones
For a single NFT minting, which isn’t even considering each time one is traded thereafter, these seem like significant figures considering how often new NFTs are coming to be.
How Much Blockchain Activity Do NFTs Constitute, Though?
The founder of the Blockchain for Climate Foundation (nonprofit), Joseph Pallant, says that NFTs comprise a small enough amount of total Ethereum transactions currently that it’s like comparing your own share of energy usage from one commercial plane flight against the entirety of all flights.
The total is massive, but your share of a singular flight seems comparatively negligible.
Several sources estimate that currently NFT transactions make up only about 1% of total Ethereum network.
Is that negligible or something we should worry about going forward as NFT tech booms?
Well, part of the answer to that question seems very much tied to who is creating the NFTs. For instance, when a celebrity artist creates art in the form of an NFT it can have a much greater carbon impact because of the large numbers of transfers.
When the musician known as Grimes released her open edition of “The Bitcoin Angel” it resulted in 468 tons of carbon.
Why Can’t The Blockchain Be More Energy Efficient?
In a simplified way we can think of the blockchain as one massive digital database that functions as a ledger. But unlike typical databases, the whole idea of the blockchain is to be immutable (or not editable).
This is the reason the blockchain is trustworthy as a ledger, because every transaction has a public log of having happened, and everyone accessing the ledger can view it. No one can change it.
Typical databases do not store entry logs like this because it’d quickly bloat the system. Those databases are designed to be read and changed as quickly as possible, which inevitably means leaving out any data the developers can stand to lose.
For a blockchain, the energy usage is in itself a form of security measure. For instance, for someone to be able to hijack data happening on the blockchain they’d have to control 51% of the total computing power going on. Given how much power that would ultimately mean, that’s next to impossible.
In Fairness, Though, How Does Crypto Mining Compare To Traditional Finance?
This is a tough one to explore, primarily because we’ve never been able to produce consistent numbers for those things. Perhaps we’ve never felt a need to do so, or perhaps there are too many moving or obscured parts for pointing at a specific number to be viable.
But that’s kind of the point for this comparison.
It’s easy to look at NFT and badmouth it because it seems expensive to produce and trade. However…
- What is the cost of mining gold, all things considered? (Plotting, vehicles/equipment, salaries, environmental impacts)
- What is the cost of operation for all traditional banking institutions? (Even specific types of transactions like ACH drafts?)
- What’s the cost of all the the debit card transactions in any given country?
Questions around the costs and environmental impacts for banks are tough to quantify because we’d have to be taking into account things like:
- Average salaries for everyone who works there, how much it costs electronically to pay them, track that, and how much more work it creates simply to pay them (HR departments, checks, etc.)
- Emissions from vehicles of all employees coming to work each day, electrical costs for each bank branch, impact on internet traffic, etc.
- Effects on restaurants and shipping, e.g. does what employees eat change if they work from home, and is it more costly or less efficient given how it works at the office? How do those changes affect supply trucks, nearby restaurants, etc.
- How much does printing money and minting coins cost annually, and what are the environmental effects of those?
Some of those things we could probably sleuth our way around and find estimates for. But other things, like mentioned above, are likely either deliberately obscured or just too complex to accurately estimate.
We could certainly say, “a lot” as an answer to those questions. But how does that “a lot” stack up against NFTs? If we can’t say with certainty, then we do need to reserve some judgement about NFT environmentally speaking.
Many would argue our current systems are inefficient as hell, and that’s part of where the push for cryptocurrency, and the blockchain came from to begin with.
Food for thought.