What Are the Environmental Impacts of NFT Sales?
Author: Rachel Martin
NFT sales have been generating millions of dollars in sales, but is that all that they are generating? In short, no. In this post we will delve deeper into the environmental impacts of NFT sales in this particular boom.
What is the problem?
Some artists and buyers think that dealing in cryptocurrency is environmentally unethical and are encouraging artists and buyers alike to stay far away from the NFT craze. Others are proposing an option for more sustainable sales. Some are saying that each individual NFT sale is responsible for further and further carbon emissions, which are pushing our planet’s climate to the limit.
Why are they so bad for the environment?
In order to buy and sell an NFT, an online marketplace is involved. These cryptocurrencies and marketplaces require a lot of data to be used in order to mine, process, and obtain individual coins. Currently, this process is largely energy inefficient on purpose; by creating such a complicated process, it is harder to mess it up or to fraudulently acquire cryptocurrency coins.
Ethereum in particular is a “hungry” cryptocurrency because the process involved in mining one coin requires “proof of work”; this acts as a form of security since there is no third party checking on these currencies. The other alternative is “proof of stake”, which requires far less energy output and locks the owner into a certain amount of cryptocurrency and threatens to take it away if they act in any way out of line with the set regulations.
When someone buys or sells an NFT, they are in part responsible for some of these emissions. To what degree exactly is still unknown and up for debate, as actual NFT sales are a relatively small portion of Ethereum transactions.
Is there hope for a greener NFT?
Some NFT sales, such as those by Beeple, are going “carbon neutral” or “negative”; this means that the carbon costs are being offset by investing in renewable energy equal to the amount being used in data. Others hope that moving cryptocurrencies to “proof of stake”, as Ethereum has promised to do, will hugely cut down the massive environmental costs this much data usage has.
The most hopeful, and seemingly obvious, answer is to switch these systems to renewable or clean energy sources. Artists are the ones pushing the change, raising money and awareness of this problem in order to create a more sustainable NFT market in a planet that is hugely threatened by such carbon-heavy energy output. Some artists are moving to less carbon heavy platforms, and others are simply encouraging buyers to purchase physical copies of their works.