It has become difficult to talk about non-fungible tokens without this new type of crypto asset almost immediately accused of being environmental destroyers. But what is it really? Do NFTs really represent a significant source of CO2 emissions for the planet?
It all started when in December 2020 the engineer Memo Akten published an article entitled “The unreasonable ecological cost of #CryptoArt“. This article has seen many updates since then.
However, its goal was simple: for NFT users to ask themselves the question about their carbon footprint using a Proof of Work blockchain. And that a constructive discussion may ensue.
At the same time, in February 2021, a French artist, Joanie Lemercier, will discover her alleged electricity consumption associated with 6 brand new NFTs made on Nifty Gateway. Faced with the alarming figures revealed by the tool used, she will decide to cancel her drops and calmly publish an article.
But it will mainly ask Nifty Gateway a little more transparency with these figures. And unfortunately, it will be greeted with deafening silence.
Two weeks after the record sale of Beeple, on March 29, Nifty Gateway announces that it has become “carbon neutral”. But too late, the controversy swells and more and more people are asking the question: what is the real environmental impact of NFTs?
Where do the numbers come from?
Let’s go to the source of the information. Where does the data used by Memo come from?
The first tool used is the cryptoart.wtf site, which allows you to calculate the carbon footprint associated with transactions relating to artistic NFTs in one click. The tool works thanks to the estimates of carbon.fyi, which has developed a more global methodology, not only on NFTs.
The team behind carbon.fyi is Offsettra, an initiative that aims to reinvest DAI stacking interests for different green projects.
In April 2021, Kyle McDonald offered to help refine Offsettra’s methodology. In fact, the methodology used by carbon.fyi has so far used only one source of data: the high estimate of the Digicomist.
The proposal is that the estimate comes close to the Cambridge Bitcoin Electricity Consumption Index (CBECI) methodology.
Starting October 8, 2021, here are the latest public figures on estimated CO2 emissions from major NFT markets:
Starting from the creation date of theOffshore as of December 2017 until October 8, 2021, the NFTs marketplaces have therefore accumulated 11,095,321 transactions. According to Etherscan.ioin the same period 1,220,905,471 transactions were carried out on the Ethereum network.
Artistic NFTs therefore represent 0.9% of the transaction volume on the Ethereum network since the end of 2017.
Also according to Etherscan, the total commissions spent in this same period are 80,384,434,081,623 gwei.
According to Memo Akten, with 1,920,251,223,094 gwei, artistic NFTs represent 2.33% of the total volume.
Also in this case, Memo’s estimate is particularly high given the low volume of sales of works of art on Opensea.
Given the figures, the problem does not therefore seem to come from NFTs but rather from the consensus currently used by Ethereum: the Proof of Work.
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A political question above all
This observation suddenly shifts the discussion of NFTs into a whole new dimension. A political dimension. On the one hand, energy consumption deemed useless, on the other a fundamental parameter for the safety and decentralization of the network: functioning in Proof of Work.
On the one hand, the voices that bring the climate emergency, on the other those that bring the urgency of a change in the financial paradigm.
But in the face of the climate emergency, just repeating that ETH2 is on the way is no longer very convincing.
Yet, in 2020, the Cambridge report was encouraging on the path Ethereum miners were taking in choosing energy mixes in different regions of the globe.
As we know, China, which was the main consumer of coal for mining, tightened its regulations on cryptocurrency mining this year. Its mining-related carbon footprint has logically had to decline since then.
But the anger caused by NFTs this year hasn’t diminished, quite the opposite. It must be said that looking at the evolution of the ecosystem in the third quarter of 2021, the numbers are enough to annoy the critics of digital art 2.0.
The main reason for this anger comes from a study of the World inequality workshop published in October 2021. The latter points out that the rich pollute far more than the rest of the population. Although the latter are more eco-responsible.
Following this logic, the more NFTs are used, the more they assume a share of responsibility in the emission of greenhouse gases. The richer its users become, the more likely they are to be included in the “most polluting 1%” box.
A message for the future
Until then, the messages addressed to the “NFT community” have been very virulent. Now that the message has been heard, the answers are emerging but they lack homogeneity to be clear.
While some will support blockchain or side chains alternatives, others will prefer to invest in carbon credits (Compensation). These solutions have been proposed in response to the various issues raised, but have not really been the subject of discussion or consensus within the NFT community …
The cryptocurrency sector and that of the environmental struggle still share one point in common: that of individual responsibility.
As often, beyond the clichés there are more contrasting findings than the simple axiom NFT = pollution. Therefore, more than the unreserved denunciation of this or that sector practice, much of the solution could above all involve a global awareness, as much as the affirmation of virtuous habits and good practices on an individual scale.
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