NFTs or non-fungible tokens have been a revelation in the cryptocurrency industry. They have allowed artists to bring their work to millions of people around the world with ease.
NFTs have also found utility beyond art; brands have used them to give customers exclusive access to events, products and experiences. As such, these digital assets have become popular in recent years.
As amazing as they are, however, NFTs present issuers and users with a big problem. While NFTs themselves do not cause pollution or harm the environment, the process of creating them can.
So this World Environment Day, let’s dig a little deeper into the problem, examine one promising solution, green NFTs, and find out if they can really make a difference.
Most NFTs are mostly minted on Proof-of-Work (PoW) blockchains like Ethereum. These blockchains require huge amounts of computing power for their mining process.
Miners need to use powerful hardware that consumes large amounts of electricity. Any operation that consumes a lot of electricity also leaves a large carbon footprint. This is why PoW blockchains constantly receive criticism from lawmakers and environmentalists.
Also, in PoW blockchains, miners are always competing to be the fastest among their peers. Their mining rewards depend on how fast they can process transactions. The transaction data they validate is grouped into blocks and added to the blockchain.
The more blocks they complete, the higher their reward. Therefore, miners are incentivized to constantly upgrade/increase their mining power. This leads to higher energy consumption and a larger carbon footprint.
It is the same computing power that is deployed in the creation of new NFTs. According to the Ethereum Power Consumption Index, each NFT created on the Ethereum blockchain consumes 223.85 kilowatt-hours of electricity. That’s equivalent to more than seven days of energy consumed by an average American home.
Green NFTs are a possible solution
That’s right, green NFTs could provide a solution to this problem. The best part is that they are so simple. They are not some special digital assets, they are just NFTs that are minted on Proof-of-Stake (PoS) blockchains.
PoS blockchains do not require miners to dedicate massive amounts of computing power. Instead, they ask miners to commit crypto to the network to qualify as transaction validators.
Therefore, miners require very little computing power to verify transactions. Also, they can pledge more cryptocurrencies to increase their chances of becoming validators. This eliminates the entire rat race of adding more computing power and solving complex crypto puzzles.
Companies like OneOf and Serenade leverage the Tezos and Polygon blockchains to mint NFTs as they are extremely energy efficient. The Tezos blockchain only leaves an annual carbon footprint equivalent to that of the average 17 humans. The OneOf website claims that Tezos uses two million times less energy than any other blockchain for minting NFTs.
But will green NFTs really work?
That’s why, when the World Wide Fund for Nature (WWF) announced plans for a Polygon-powered NFT collection, it was met with widespread public objection. Although the project was intended to raise funds for wildlife conservation efforts, it faced severe criticism; some even went so far as to call it “grim”, “wacky” and “incredible”.
This despite the fact that WWF reiterated that “each transaction on Polygon produces only 0.206587559 grams of CO2”.
Therefore, the effectiveness of using Green NFT is still up for debate. However, one thing is for sure: they are definitely a welcome transition.
If more artists and brands switch to green NFTs, the environmental impact of these digital assets could be greatly reduced. And at this point, where the entire world is looking down the barrel of a climate crisis, every step, no matter how small, is a step in the right direction.
(Edited by : anand singha)