NFTs or Non-Fungible Tokens have been a revelation in the crypto industry. They have allowed artists to bring their work to millions of people around the world quite easily.
NFTs have also found utility beyond art; Brands have used it to provide customers with exclusive access to events, products, and experiences. As such, this digital asset has been gaining popularity in the past couple of years.
However, as amazing as they are, NFTs present issuers and users with one big problem. While NFTs themselves do not cause any pollution or harm to the environment, the process of creating them can do so.
So, this World Environment Day, let’s dive a little deeper into the problem, examine one promising solution – green NFTs – and see if they can really make a difference.
Most NFTs are primarily minted on Proof of Work (PoW) blockchains such as Ethereum. These block chains require huge amounts of computing power for their mining process.
Miners need to use powerful devices that consume huge amounts of electricity. Any process that consumes electricity also leaves behind a large carbon footprint. This is why PoW blockchains are constantly receiving criticism from lawmakers and environmentalists.
Moreover, in the PoW blockchain, miners are always racing to be the fastest among their peers. Their mining rewards depend on how fast they can process transactions. The transaction data they validate is compiled into blocks and added to the blockchain.
The more blocks they complete, the higher their reward. Hence, miners are motivated to constantly update/increase their mining power. This results in increased energy consumption and an increased carbon footprint.
It’s the same computing power deployed in creating new NFTs. According to the Ethereum Energy Consumption Index, each NFT created on the Ethereum blockchain consumes 223.85 kWh of electricity. This equates to more than seven days of energy consumed by the average American household.
Green NFTs are a possible solution
That’s right, green NFTs can provide a solution to this problem. The best part is that it is very simple. It’s not some private digital asset, it’s just NFTs minted on the Proof of Stake (PoS) blockchain.
PoS blockchains do not require miners to dedicate huge amounts of computing power. Instead, they require miners to pledge the network’s cryptocurrency to qualify as transaction validators.
Hence, miners require very little computing power to verify transactions. Also, they can pledge more cryptocurrencies to increase their chances of becoming an auditor. This eliminates the entire rat race to add more computing power and solve complex cryptographic puzzles.
Companies like OneOf and Serenade are harnessing the Tezos and Polygon blockchain to instrument NFTs because they are extremely energy efficient. The Tezos blockchain only leaves behind an annual carbon footprint equivalent to 17 average people. OneOf claims that Tezos uses 2 million times less power than any other NFT-mining blockchain.
But do green NFT technologies really work?
That’s why, when the World Wildlife Fund (WWF) announced plans for an NFT group backed by Polygon, it was met with widespread public objection. Although the project was intended to raise money for wildlife conservation efforts, it faced heavy criticism; Some have even gone so far as to describe it as “bleak,” “crazy,” and “unbelievable.”
This is despite the fact that the WWF asserted that “each transaction on Polygon produces only 0.206587559 grams of CO2”.
Therefore, the efficacy of using green NFTs is still under discussion. However, one thing is for sure – it’s definitely a welcome transition.
If more artists and brands move to green NFTs, the environmental impact of these digital assets can be significantly reduced. And at this point, as the entire world is staring into the crater of the climate crisis, every step, no matter how small, is a step in the right direction.
(Edited by: Anand Singh)