NFTs have shaken the world of cryptocurrencies and beyond, that’s for sure! Starting from Average Investors who just wanted to get into the NFT Hype train and score massive profits, to critics and cynics of the industry who saw NFTs as nothing more than an avenue for scamming and other unlawful financial practices.
As with all hypes however, it all would eventually die down. So when things subsided for this billion-dollar industry, critics found new angles to abuse and lambaste NFTs, all to paint it in a negative light.
Their biggest selling point nowadays is the fact that NFTs are detrimental to the environment, which is old news as this has been their case since cryptocurrency became a big thing in 2016, and it would seem as though they just passed the blame along. Add to this the fact that there have been multiple activist groups and movements who were mobilized to “cancel NFTs” and “expose” NFTs as nothing but cash-grabs who detrimentally affect the environment!
All of this painted NFTs in a harsh light and contributed to its hype dying out eventually, although other factors played more roles than the slander it received from environmentalists.
In reality however, we’re not here to talk about how detrimental to the NFT landscape’s growth these comments made are, the bigger discussion at hand is if NFTs really impact the environment!
So the question has to be asked, Do Non-Fungible Tokens (NFTs) Harm the Environment? If it does, what can we do to reduce the damage it inflicts in the environment?
Table of Contents
In what ways do NFTs Impact the Environment?
Within the NFT Landscape, three main processes take place, all of which require energy to perform, and each impacting the environment by means of energy-source depletion.
- NFT Minting
The process of creating an NFT from smart contracts and other algorithms, which in turn tokenizes the asset and stores it into the blockchain. The process itself of creating an NFT through minting requires copious amounts of energy to perform, approximately 47 days worth of typical American Household electric consumption, which is a lot! - NFT Listing
NFT listing is the least consuming of all the three main processes in the landscape, as it only asks for transactions to be processed one time, which will put the NFT up for auction or sale, and from there, potential buyers could take a look at the NFT and choose to invest in it. - NFT Sale
Arguably the most consuming out of all the processes as it is done in bulk and involves thousands of people in the network. The process requires a buyer to exchange his tokens of equivalent value to the price posted on the NFT, which effectively makes him the owner of the NFT until he chooses to sell it or transfer it to another owner.
The process involves the blockchain confirming multiple transactions in one go, and if done within a Proof-of-Work consensus mechanism, requires the use of an entire computing block to resolve. This uses so much energy in the process.
Buy NFT, Harm the Environment(?)
It has to be noted that the notion that NFTs are ruining the environment has been long-running in the industry, even before the launch of NFTs in the first place. When NFTs weren’t a thing, people hated cryptocurrency mining as in their own words “the use of non-renewable energy for mining cryptocurrencies causes detrimental effects on the environment.”
Since NFT’s conception, it would seem as though the blame was passed on to this novel concept. Because as more and more people jump into the hype train looking to get in on the hottest NFTs in the market, so did the amount of haters that pushed NFTs away from the spotlight, using the same “environmental detriment card” as part of their smear campaign against NFTs.
But the truth is, their hate, although sensationalized and at times exaggerated, isn’t entirely unfounded and is not directed only to make NFTs appear bad in the mainstream media. There are real risks involved with creating and processing transactions with NFTs, since most of these are done in a household setting, which uses grid energy that is then harvested from the burning of fossil fuels which we all know is detrimental to the quality of the atmosphere and the environment.
So what did the industry do about this?
Can NFTs Use Less Energy?
The discussion of NFTs using less non-renewable energy has been over, and various ways were taken to achieve this dream. As of this writing, there have been methods employed by large NFT groups and projects to make sure that they use less non-renewable energy, and efficiently utilize whatever they would use.
Ethereum, one of the biggest networks in the cryptocurrency market and the main driver for NFTs in the first place shifted from the energy-intensive Proof-of-Work consensus framework to the more efficient, and less energy-consuming Proof-of-Stake, and although it doesn’t really promise anything on the side of hastening transactions and cheapening them within the network (as Vitalik Buterin mentioned), the fact that the new framework allows for a more efficient use of energy is more than enough to call this a success.
On the other hand, smaller startups and enterprises took to renewable energy sources for the facilitation of their transactions. Most of them employed solar and wind energy as well as biomass, which all helped with lessening their electricity costs on one hand, which can go upwards of tens of thousands of dollars in a single month, as well as lessening the impact that they make in the environment.
Some notable identities in the industry even took it a step forward, and introduced features never before seen in the industry. One such thing is NFT Fractionalization, which divides the NFT into units that can be bought or sold separately. The process of dividing an NFT is not as energy-intensive as creating one, and it effectively makes every NFT easily accessible which not only drives more sales, but simultaneously pushes less energy due to the fact that instead of NFTs being passed around, representative tokens endowed with the same values and properties as the main NFT itself is being passed around instead!
In all sense of the word, real effort was being made by stakeholders and enthusiasts in the industry to make NFTs as sustainable and environmentally-friendly as possible.
So, how does this sit with environmentalists?
Can Environmentalists Invest in NFTs?
Environmentalists are always welcome to try the NFT landscape, which growed from its previous ‘profit-centric’ paradigm to an ‘advocacy and creator-centric’ system that helps regular users and investors be given the voices they need to air out influence and exposure of certain pressing matters in the world.
And if in any case Environmentalists couldn’t invest in the NFT landscape due to the fact that it previously conflicts with their interests and principles, fret not! The industry is pretty much energy-efficient now, thanks to the collaborative global efforts made by large stakeholders in the industry, and most of the networks you’d buy and invest NFTs on are either efficient with their usage of electricity, or have resorted to using renewable resources instead!
If Proof-of-Work is still something that doesn’t sit well with you as an environmentalist, switching to NFTs minted on Proof-of-Stake networks like Ethereum, CUDOS, and more are a welcome alternative that provides you with the peace of mind that you’re helping Mother Nature heal, while securing a better-equipped future for you as well!
You can also look towards Fractional NFT Ownership, which is not only efficient, cheap, and smart, but also helps with reducing the burden that NFTs impart to the environment!
Wrap Up
While the NFT space previously relished in its mismanagement of energy sources, no thanks to energy-intensive paradigms that have helped shape the industry but caused detrimental effects in the environment, the shift in interest within the NFT landscape gave way for more awareness and care for the environment.
This led to movements made within the NFT space that drove the use of energy-efficient methods which in turn created a more sustainable environment for NFTs, and a less energy-intensive space.
So now, remember that every time you buy an NFT off of your favorite marketplace like OpenSea, be at peace with the fact that efficiency was taken in great consideration as it was being minted, and the years of growth and development within the industry didn’t just made it shift towards a more beneficial industry that promises infinite potential beyond profit.
Know that the industry itself has also shifted towards caring for Mother Nature, every bit, every transaction!
