What exactly is the NFT environmental impact? Are NFTs bad for the environment? The debate has raged since before JPEG Summer. 

As in Politics, so too in Blockchain. Oversimplification creates lightly edutained factions who know only one-sided basics surrounding critical issues. 

So: Are NFTs bad for the environment?

The short answer is, “No, not really. But, kind of. And just for now.”

Let’s break that down, one sentence fragment at a time. 

NFT Environmental Impact Explained

“No, not really.”

Aspirin, chewing gum, clothing, lipstick, shampoo, solar panels, and toothpaste. 

What do they have in common? More often than not, these items are made with petroleum byproducts. 

What else do they have in common? Hoards of citizen activists, entrepreneurs, and sustainability experts are creating affordable, renewable alternatives. (I mean, what solar panel manufacturer wants to be hog-tied to Big Oil?)

Just as the above inventions were built using an environmentally detrimental practice, NFTs were invented on a proof-of-work blockchain.

NFTs represent only a portion of the activity on blockchain. As I will explain, the energy output would likely remain relatively stable if every NFT evaporated. However, the fees paid to miners would plummet.

What is proof-of-work (AKA POW)?

A proof-of-work blockchain uses miners to verify and record all transactions on that given blockchain. Blockchains can be likened to ledgers used for storing transactions. Each blockchain is its own ledger, so, for instance, Bitcoin and Ethereum are essentially like two separate internets.

POW, a standard blockchain protocol since before Bitcoin, carries many benefits — primarily security — but the protocol can require a nation-load of energy. 

“But, kind of.”

POW blockchains are relatively slow, given the demand placed upon them.

NFT transactions are like every other transaction on a blockchain, and they use as much energy. That said, the queues of POW blockchains — limited to ~15 transactions per second — would still be cloggy without NFTs. (Let it be noted that though Bitcoin’s energy consumption is crazy, you can’t mint NFTs on the Bitcoin blockchain [without a lot of workarounds]).

Lax internet commentary can lead to misinformed assumptions, like “all cryptocurrency is bad for the environment.”

For instance, this New Yorker piece from April 2021 uses the terms “Bitcoin” and “cryptocurrency” as if they were synonymous. This is an egregious error on the level of lumping into the same category a 2009 Hummer and a 2021 Tesla, and it’s a conflation thrown around daily. 

It’s more than a semantic oversight. Conflating these terms ignores the dedication and brilliance of so many environmentally motivated developers, some of whom have managed to create carbon-negative cryptocurrencies that were fully operational before the linked article was published.

“And just for now.” 

Proof-of-work will be antiquated soon.

Ethereum, the world’s most robust blockchain network, will soon move to a more eco-friendly consensus protocol (proof-of-stake) to reduce its energy consumption by 99.98% and increase its capacity from ~15 transactions per second (tps) to hundreds of thousands of tps.

In the meantime, web3 creators have latched onto services like Aerial for carbon offsetting or alternative blockchains that already use environmentally friendly protocols. 

Starting today, in observance of Earth Day, MakersPlace is partnering with Aerial to provide carbon offsets on all NFT purchases made on our platform. 

Thanks to the immutability and transparency of blockchain, an environmentally friendly blockchain ecosystem could go a long way toward solving some of the world’s most intractable environmental issues.

Here are a few of the use cases and projects for building a more sustainable future with blockchain technology. 

  1. Creating a more transparent supply chain to track products from the producer to the store to prevent waste, inefficiency, fraud, and unethical practices. (FoodTrax and Provenance)
  2. Lending compute power to underserved users in developing countries. (Golem Network)
  3. Using crypto rewards to track recycling and protect the environment from pollution and unsustainable disposal practices. (Reflow, REcycle Coin, RecycleToCoin, and Plastic Bank)
  4. Energy sharing to eliminate energy storage and loss. (SunContract)
  5. Renewable energy investments for citizen investors (Ecochain and Sun Exchange)
  6. Tracking donations and actions for greater accountability at non-profits. (Bitgive and BitHope

TL;DR

Are NFTs bad for the environment?

“No, not really.”

The NFT ecosystem represents only a portion of the activity on blockchain. NFTs have encouraged many people and organizations to invest in cryptocurrency, but the bottleneck of proof-of-work blockchains limits the number of transactions. This means that the energy output would likely remain the same if every NFT evaporated, but the fees paid to miners would plummet. 

“But, kind of.”

Corporate institutions have perfected the art of guilting consumers, but the blockchains that host NFTs are ultimately responsible for the energy output of their blockchains. The economic activity around NFTs is no more or less irresponsible than buying a new car or iPhone or Nike shoes. Luckily, “ownership” of a blockchain is distributed, so anyone who owns a blockchain’s native token can (theoretically) motion to resolve the protocol’s structure to more environmental best practices. 

“And just for now.”

There are legitimate claims against blockchain as an environmental wrecking ball. But most of those complaints are in response to conflating Bitcoin mining operations with how all blockchains work. When Ethereum moves to proof-of-stake, Bitcoin will (essentially) be the lone bull in a china shop. But, again, that particular bull doesn’t hodl NFTs. 
So next time someone declaims NFTs as environmentally destructive, you can supply the ever-eloquent response: “No, not really. But, kind of. And just for now.”

Click here for our Guide to NFT Editions

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