Environmental effects of NFTs
You may have heard that NFTs are not 'green,' and 'bad for the environment.' However, depending on how the NFT is produced, there are different ways we can make sure we're looking after the environment.
As NFTs become more mainstream, they have attracted the attention of environmental groups and individuals concerned with the large amounts of electricity cryptocurrency mining consumes.
According to a 2020 article, a single Ethereum (ETH) transaction consumes around 35 kWh, which is about the same amount of electricity that an EU resident uses in four days. Or another way to look at it is, the daily carbon footprint of Bitcoin is the equivalent of watching 57,000 hours of YouTube videos (via 2021 stats).
However, transactions dealing with NFTs average around 82 kWh, over double the amount of an average ETH transaction.
This energy consumption is unsustainable and has sparked debates over energy-intensive blockchains due to the growing adoption of web3 technologies. However, this technology is here to stay and impacts us all in a net positive way.
So, how do we understand the relationship between web3 and the environment?
We start by looking at NFTs, the most talked-about part of web3.
What's important to understand is that the NFTs themselves are not harmful to the environment; harm comes from the blockchains upon which they exist. Ethereum, the most popular blockchain used to mint and trade NFTs, was one of the biggest culprits.
However, Ethereum transitioned to a newer, more efficient consensus mechanism on September 15, 2022.
The two major consensus mechanisms are:
- Proof-of-work (PoW)
- Proof-of-stake (PoS)
This chapter will take a look at how both mechanisms compare in energy consumption, as well as some potential solutions to the energy problem.
The hope is that this information will help you make more informed decisions when it comes to minting an NFT, starting your project, and collaborating with established Web3 brands.