NFTs are the new talk of the town and the surrounding hype is one of the fastest in the burgeoning blockchain universe. Regardless of how lucrative NFTs may seem, there are environmental concerns.
Here, we weigh the relative pros and cons of entering NFT territory and take a look at the environmental implications:
Cryptography & Mining – The Energy Draining Process
The name cryptocurrency comes from cryptography, the art of writing or solving codes or complex mathematical problems.
Cryptography is used by blockchain miners to validate transactions or any data that needs to be added to the blockchain. Blockchain mining is used to secure and verify bitcoin transactions, an integral part of the buying and selling of NFTs.
This whole process of mining is facilitated by extremely powerful computers and equipment that drain electricity at a rapid pace.
Overall, the process of mining becomes quite expensive and energy-consuming.
Why does Mining Continue Despite the Obvious Expenses?
From a blockchain miner’s perspective, each transaction includes compensation for the mining process. So, despite the energy costs, there’s money to be made in mining.
The Proof of Work Model
The proof of work model dictates how miners make money from transactions. In essence, proof of work is the literal proof of how much energy was spent while validating a transaction.
In the long run, the actual cost of mining is compensated by the original initiator of that specific transaction, also known as gas fees.
Blockchain mining is important because cryptography and mining negate the manipulation or forgery of transactions. The process is so complex it makes transactions impossible to hack.
Figures & Stats About the Energy Consumption & the Carbon Footprint
Mining Ethereum requires more than just clean energy. Inevitably, this means a lot of miners use fossil fuels to power their supercomputers.
Although there’s no foolproof way to confirm whether all miners have the same energy resources, there are estimates of the overall carbon footprint.
For example, a single Ethereum transaction leaves a carbon footprint of 63.37 Kg CO2 – which is equivalent to the carbon footprint of about 140,450 VISA credit card transactions.
Clearly, this is a lot of carbon dioxide for an average NFT transaction!
As far as the energy consumption goes, a single Ethereum transaction involves about 133.4 kWh which is enough electricity is enough to power an average household for more than four days.
Furthermore, these numbers add up significantly when you make a yearly tally.
The annual carbon footprint of Ethereum transactions as a whole, rounds off to more than 27.5 Mt CO2. (1 Mt CO2 = 1000 Kg CO2)
On the other hand, the yearly energy consumption goes to 57.87 TWh. (1TWh = 1,000,000,000 kWh)
These numbers are more than enough to match the annual carbon footprint produced by entire countries!
How Do We Save the Future of NFTs & the Environment at the Same Time?
It’s clear that sacrifices have to be made for the future of NFTs as well as our environment.
Historically, we have faced similar situations. Take vehicles as an example.
Earlier cars consumed a lot of fuel but more recent electric vehicles are far more energy-efficient.
In a similar light, we need to find alternatives for the energy consumption involved with NFTs.
One such alternative is the Proof of Stake model.
The Alternate Method – Proof of Stake
As we know, blockchain technology is decentralized and the blocks must go through several nodes for keeping a record of the data.
Also, the proof of work model requires cryptography to add transactions in the blocks. After all, that’s where most of the energy is being used.
In the Proof of Stake model, blocks can be added directly without going through the process of mining, bypassing the high level of energy consumption.
One big problem with this method is the centralization of the blockchain.
When the blocks are added with such ease, it is also easier to compromise the network.
This is where the stake comes in the proof of stake model. It states that a miner can only create blocks that are of the same value as the coins they own.
Having some stake in the blockchain will avoid any manipulation or harm to the system.
However, it remains a mystery whether NFTs will adopt the POS model in the foreseeable future.
Are NFTs Still Worth Rooting for?
Absolutely! From intensive security measures to having easy access to auctions – NFTs have everything that a creator, seller and collector needs.
All things considered, we shouldn’t abandon such an amazing invention without exploring its capabilities.
It’s fair to say the NFT is one future avenue of art. A little bit of balance may make it fit quite well in nature.