How Do NFTs Impact the Environment?

If you’ve spent any amount of time on the internet or social media recently, you’ve likely heard of NFTs. You may have also seen the controversy surrounding them. People online are questioning the environmental impact of NFTs, much in the same way they are concerned about cryptocurrency.

Explaining what an NFT is, its purpose, and how it affects the planet can be tricky because it’s all a bit “meta.” This article simplifies it all as much as possible so that you can understand with clarity the role NFTs play in the ongoing climate crisis, and how their environmental impact could be lessened. 

What is an NFT?

NFT, which stands for Non-Fungible Token, is a digital asset that is traded over the blockchain using cryptocurrency ¹. “Non-fungible” refers to something that is not interchangeable ². NFTs can be videos, photographs, artwork — you name it. For artists online, NFTs are extremely attractive to secure their work from copycats and fraudsters. Previously, anyone could take a screenshot and claim the work was their own. With an NFT, the owner of the artwork has a verified token that works as digital evidence of the artwork or product’s originality. Take for example the Mona Lisa. T-shirts, coffee mugs, you name it and her face is on it. But there’s only one original piece. 

When an NFT is purchased, the transaction is verified and recorded on the blockchain, a secure online database. This database is encrypted, ensuring its security. NFTs seem to serve as a solution to authenticating original ownership, which artists and designers have been searching for. However, it’s not without faults when you consider the energy consumption associated with NFT trading.

How do NFTs impact the environment?

The controversy surrounding NFTs and their impact on the environment boils down to how they are traded: the blockchain. It’s the use of the blockchain in NFT trading that creates a negative environmental impact — not the NFTs themselves. 

The blockchain’s energy consumption is remarkably high, and there is major debate surrounding how much of the blockchain’s use is powered by clean energy sources ³. Regardless of the ongoing conversation, it’s widely recognized that a majority of our energy consumption comes from fossil fuels, meaning that high energy consumption from the blockchain makes NFTs damaging to the environment. In fact, single NFT artwork has sold through trades that were equivalent to a year’s worth of energy ⁴. As NFTs gain popularity and mainstream momentum, the energy associated with them increases. It’s not a sustainable way forward.  

It’s important, however, when discussing the nuance of digital assets and their cost, to remember that artists and this new method of ownership aren’t solely to blame for the climate crisis. Many artists are fighting back, reminding people that traditional artwork has a hefty carbon footprint too, from materials to shipping emissions. Not to mention, the top 100 companies from the richest countries in the Global North account for 70 percent of all carbon emissions worldwide ⁵. 

Another factor to consider is consumer purchasing power. When the demand goes away, so does the product ⁶. When enough people protest the use of single-use plastic, companies ban it in lieu of more sustainable solutions, like paper bags or metal straws. There is power in the collective action of individuals. So, the counterargument becomes, if there was no demand for NFTs, NFT trading wouldn’t be necessary. 

There may be a third way. If we could all tap into our own creativity and reimagine how NFTs could be traded in a greener capacity, we’d see lessened carbon emissions and still enjoy NFT trading. 

Reimagining NFTs

NFTs in their current state are terribly energy inefficient. However, they are undeniably the future of artwork and a solution for authenticating purchases, from concert tickets to designer handbags. If proof of originality can be reimagined, why can’t the way we buy NFTs?

Those concerned with the energy NFTs require are finding alternative solutions, including harnessing clean energy to power blockchain transactions, donating NFT profits to carbon offsetting projects, and using greener cryptocurrencies (like Ethereum) to purchase NFTs ⁷. While no one solution is perfect, many Digiconmists believe greener NFT trading is possible and will happen sooner than we think. 

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