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NFTs: Are They Climate Friendly

NFTs truly are the hot topic of the moment and much media concentration focuses on their economic and even artistic profits – but what about the environment? Here’s a great example to illustrate the relationship between the two and unpack the impact that crypto art truly has on the environment. 

Joanie Lemercier is a French artist known for his perception-bending light sculptures. Two years ago, he took on a new role as a climate activist and made a lot of progress; he began a campaign demanding Autodesk stop selling its design software to fossil fuel operations and even vowed to reduce his energy use by 10 percent each year, a goal he had successfully met. A few months ago, however, much of this effort was erased. Lemercier capitalised on his popularity as an artist, as did many others, to jump on the NFT bandwagon. He put 6 crypto artworks for sale on Nifty Gateway – they sold out in 10 seconds for thousands of dollars. The sale also consumed 8.7 megawatt-hours of energy, as he later learned from a website called Cryptoart.WTF. That figure was equivalent to two years of energy use in Lemercier’s studio. You can smell the irony. Whether Lemercier was aware of this aftermath or not, it is unclear (we aren’t here to shade him) but what is clear is the drastic effect crypto art can have on the climate. 

So here’s the deal. The NFT model consumes lots of energy. The major marketplaces for NFT art, which include MakersPlace, Nifty Gateway, and SuperRare, conduct their sales through Ethereum (a form of currency), which maintains a secure record of cryptocurrency and NFT transactions through a process called mining. The system is similar to the one that verifies Bitcoin, involving a network of computers that use advanced cryptography to decide whether transactions are valid—and in doing so uses energy on the scale of a small country.

How exactly that energy use translates to carbon emissions is a hotly contested subject. Some estimates suggest as much as 70 percent of mining operations may be powered by clean sources. But that number fluctuates seasonally, and in a global energy grid that mostly runs on fossil fuels, critics say energy use is energy use. Some mining hotspots popular because of cheap hydropower, such as Missoula, Montana, have banned new operations over concerns that even “clean” mining would push neighbouring energy users to dirtier energy sources. Ethereum’s developers have planned a shift to a less carbon-intensive form of security, called proof-of-stake, via a blueprint called Ethereum 2.0. But this has been in the works for years, and there is no clear deadline for the switch.

Fanny Lakoubay, a crypto art collector and adviser, told Wired magazine that she is advising investors not to “go too crazy” right now because the detrimental environmental effects are so unclear. 

There is hope. Open Earth Foundation is a registered nonprofit focused on cutting edge research and deployment on the use of open digital infrastructure, including blockchains, for climate accounting under the Paris Agreement. This auction is now trending in the NFT world as the #CarbonDrop.

“It has been inspiring for us to work with these amazing artists on raising climate awareness as well as funds for critical digital public goods. Our work on global climate technology tends to be very innovative for the mainstream environmental space, but certainly not for artists that are pushing the boundaries of their sector with technology”, says Martin Wainstein, founder and executive director of Open Earth Foundation.

Furthermore, while Bitcoin and Ethereum are the most popular forms of cryptocurrency, they also require the most energy. Convincing crypto users to switch to low-energy alternatives was always going to be a hard sell. However, users now have a more tangible incentive for transitioning to Proof of Stake chains: money. Put simply, Ethereum is expensive to use. Demand for block space, fueled by DeFi and NFTs, has pushed gas prices to record highs. With retail users priced out of conducting chain trades, which routinely now surpass $100 per transaction, Proof of Stake chains that once lay dormant or under development are starting to gain traction.

Needless to say, self-awareness is critical to understanding the day-to-day actions that give rise to climate change. To this end, an upcoming month-long awareness campaign will incentivize NFT and crypto stakeholders to neutralise their climate impact in any way they can. The Open Earth Foundation will participate in the #carbondrop campaign which culminates, fittingly, on April 22 – Earth Day. 

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