Since last year, the collectionist craze for NFTs has skyrocketed, especially with celebrities Lindsay Lohan, Gwyneth Paltrow and even Brie Larson endorsing the trend.
NFT stands for non-fungible token, defined as a non-transferable digital piece of artwork most commonly bought with Ethereum. These bits of artwork are owned by the buyer that are kept in a blockchain. However, they don’t really guarantee any form of copyright protection.
In fact, NFT buyers don’t even own the artwork itself, but rather the metadata attached to it. It would make sense that to buy ownership is to mark your own copy of an artwork as a unique iteration. Some say NFT buyers earn bragging rights along with their purchase. However, with today’s digital capabilities of taking screenshots of images on the internet, the exclusivity starts to lose its meaning.
While the incentive of buying and selling NFTs can be huge, the market is still currently small and new with a limited consumer base. Cryptocurrency is still a concept not completely understood by mostly older generations or those who are not tech-savvy.
The most popular collection in the NFT market is the Bored Ape Yacht Club, consisting of over 10,000 ape pictures in countless variations. Well-known buyers include Snoop Dogg, Justin Bieber, Post Malone, Eminem, Marshmello, Shaquille O’Neal and many more entertainment and sports celebrities. CryptoPunks is also one of the first collections to dominate the market with over $2 billion in sales. Last year, the famous YouTube video “Charlie Bit My Finger” was auctioned and sold as an NFT to 3F Music for $760,999.
This new movement, however, did not stop numerous internet users from criticizing the trend’s boom in popularity. In fact, NFTs have been proven to be harmful for the environment due to the massive amounts of pollution they emit.
As cryptocurrency is the only possible form of economic transaction for anyone wanting to buy NFTs, the images contribute to increased necessity for cryptomining. Mining, in this case, refers to validating each cryptocurrency transaction, which emits greenhouse gases, especially carbon dioxide.
Cryptomining is also popular due to the fulfilling return on investment each miner receives. However, a computer with a strong GPU is required as well as a lot of electricity-intensive power. Even then, you run a high risk of degrading your GPU and cooling fans in the long run unless you undervolt those components.
According to a study conducted by Forex Suggest, Bitcoin emits an estimated 57 million tons of CO2 annually. Ethereum outputs a little less than half of that amount. Some crypto enthusiasts, however, believe the environmental impact of NFTs is only as harmful, if not less harmful, than that of other traditional industries.
“While most cryptomining operations are going in a more environment-friendly direction, those same renewable energies should be going into more necessary uses such as electric cars, wind turbines and other contemporary technologies.”
“Cryptocurrency is a massive improvement over traditional banking industries and most large scale mining operations are using renewable energies,” said Reddit user Dabdaddi902.
While most cryptomining operations are going in a more environment-friendly direction, those same renewable energies should be going into more necessary uses such as electric cars, wind turbines and other contemporary technologies.
“If mining for tokens continues to be extremely energy intensive, it will continue to put pressure on electricity grids and eat up renewable energy that could otherwise go toward something arguably more urgent — like heating or lighting homes,” said The Verge writer Justin Calma.
Most people would agree NFTs are trendy and fashionable, but it’s inevitable to deny these tokens need to rely on some sort of energy for themselves to be validated, minted and inserted into a blockchain.
Other crypto buyers argue cryptomining isn’t directly responsible for environmental costs. “NFTs most likely do not have a direct, causal relationship with CO2 emissions, because they are just making use of the underlying blockchain that Ethereum is already running,” ARTNews writer Shanti Escalante-De Mattei said. They may not be directly influencing emissions, but purchasing NFTs still causes CO2 emissions regardless of which blockchains are used to process them.
Since cryptocurrency is a decentralized financial system, it also doesn’t help that these tokens are susceptible to online theft. Just last month, $1.7 million in NFTs was stolen from OpenSea buyers in a phishing attack. According to the company’s CEO, the victims signed a partial contract, unknowingly leaving the attackers to sign the rest and steal their NFTs. The phishing emails did not originate within OpenSea’s infrastructure, either.
While NFT culture has been frowned upon and mocked by many Internet users around the world, there are a few upsides to buying them. First of all, it’s a better deal than buying a Twitch streamer’s fart jar for $1,000. On a more serious note, NFTs can increase the value of the supply chain and reduce the cost of transaction.
Furthermore, NFTs’ rising popularity has helped digital artists reach new audiences, also enabling them to directly interact with their fans rather than hiring agents. Unfortunately, NFTs cannot solely protect buyers from online theft. Regardless, these tokens have the potential to secure both a company and an individual’s private information that might be sensitive.
Currently, though, the consumer payoff doesn’t seem significant enough for anyone to own an NFT other than to capitalize on the cryptomarket and gain special ownership rights. Fortunately, some artists are actively attempting to decrease carbon footprint from their artwork.
French NFT artist and climate activist Joanie Lemercier claimed his studio is working on reducing electricity consumption by 10% annually. The artist even admitted his own negligence regarding energy output at the beginning of his project.
“Until recently, I had very little interest or knowledge of the amount of energy I was consuming. As my work relies heavily on technology, computers, projectors and require energy, it feels irresponsible to keep consuming resources without a basic understanding of the energy system my practice depends on,” Lemercier explained.
The Ethereum model is also subject to change soon, favoring more of a proof-of-stake structure. Under this new model, validations would be processed based on the amount of the buyer’s Ethereum rather than resort to power consumption. The model is still in the testing phase but if approved it would have the potential of cutting down a significant amount of CO2 emissions.
The NFT market doesn’t seem like it will stop anytime soon. According to nonfungible.com, total NFT sales skyrocketed by 50.3% from $15.5 billion to $23.3 billion since the beginning of this year. However, there’s no telling if and when a market crash will happen.
Furthermore, the sustainability of NFTs completely depends on its own ongoing demand. On the bright side, the environmental impact may not be as harmful in the near future if this proof-of-stake model goes forward. For now, NFTs are here to stay whether the internet likes it or not.