And it’s proven successful: hundreds of thousands of users try to buy a “Moment” on the platform every time a new one becomes available. “Your NFT has a carbon footprint.”Nifty Gateway, which is one of the most popular NFT marketplaces, recently pledged to become “carbon negative” through carbon offset purchases and improvements in its technology.”The environmental impact can certainly be mitigated with greener compute and mining technologies. And with the value of cryptocurrency skyrocketing, some think there’s never been a better time to get in on it.
Blockchain entrepreneur Vignesh Sundaresan, also known by his pseudonym MetaKovan, shows the digital artwork NFT “Everydays: The First 5,000 Days” by artist Beeple, in his home in Singapore. “I think it’s just a natural evolution.”
Are NFTs threatening the future of the planet? It creates a perpetuating cycle of greater computer power and larger warehouses and stronger cooling units just to keep up — and an exponentially rising carbon footprint. This amount of work is intentional — it creates a competitive market and prevents security threats. By Sophie Lewis
May 17, 2021 / 9:43 AM
/ CBS News
Crypto enthusiasts burn and digitize Banksy artwork
Crypto enthusiasts burn and digitize Banksy a… “Ten years ago, you could safely say, ‘Cars have a huge carbon footprint.’ Now that electric cars are a realistic option, we have to be more precise: ‘Gas cars have a huge carbon footprint.’ In the same way, you could have accurately said three years ago, ‘NFTs waste a lot of electricity.’ But given the option to use PoS blockchains, you now should be more precise: ‘PoW NFTs waste a lot of electricity.'”So, it’s an oversimplification to say all NFTs are equally bad for the environment. “It depends on which blockchain they use and how many transactions are settled on the actual blockchain. Many artists are also working to raise awareness about alternatives to Ethereum. But when he did the calculations, he found that the three art pieces he wanted to sell would use the equivalent of two decades of his personal electricity use.”This leaves such an ecological guilt for me that, at this time, I have to say no to that,” Precht concluded, after discovering just how much carbon offsetting would be needed for his artwork alone. Whether those emissions can be tied directly to individual NFTs, or just the blockchain as a whole. Memo Akten, a digital artist, analyzed about 18,000 NFTs, finding that the average NFT has a carbon footprint equivalent to more than a month of electricity usage for the average person living in the European Union. Ethereum, the open-source blockchain that hosts NFTs, uses a purposely inefficient “proof of work” (PoW) method to create these digital assets.
Powerful computers can make an unfathomable number of attempts every second to produce new blocks.
So why is everyone so eager to jump on the NFT bandwagon? NFTs, or non-fungible tokens, are original, unique digital collectibles — and they have taken over the art world in the past few months. “NFTs are the first time we can meaningfully have scarce or unique collectibles as part of our digital lives.”Artists around the world were thrilled: NFTs provide the opportunity for them to make significant money on their work, reach a broader audience all over the world and link a digital file to a creator, ensuring authenticity. “That being said, the scale of environmental impacts of proof of work blockchains is significant. Where they disagree?
Ethereum runs whether or not NFTs are created. But the digital registry where that piece of art, called an NFT, is stored is responsible for the annual emission of more carbon into the atmosphere than most small countries. Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” he wrote.
Cryptocurrency: Virtual Money, Real Power
Crypto miners have been blamed for power outages in Iran, and a recent study found the energy consumption of the Bitcoin blockchain in China alone exceeds the total yearly greenhouse gas emission output of the Czech Republic and Qatar.Attempts to calculate the environmental impact of mining and NFTs have yielded varying results — but, experts can agree, the overall carbon footprint of the blockchain is colossal. Dapper Labs’ NBA’s Top Shot, where basketball fans can purchase NBA highlights as NFTs, runs on the Flow blockchain, which uses a lot less computing power and therefore results in lower emissions. A digital trading card of an epic LeBron James dunk sold for $208,000. He said the company is looking at alternative cryptocurrencies that use less energy per transaction, and the price of Bitcoin immediately fell. “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. “While carbon offsets are better than just ignoring the problem, the real solution is to move to a blockchain that can be secured without burning enough electricity to power a medium-sized country,” Shirley said. Chris Precht, an Austrian architect and artist, said on Instagram that he “felt like a little kid again” when he first learned about NFTs. “A lot of this requires a big developer community, and the developers are all on Ethereum.”Köhler noted that “the impacts of NFTs can further be reduced by building systems on ‘Layer 2′ instead of directly on the blockchain.” Layer 2 transactions are bundled together, resolved off the chain, and then brought back on the chain as one transaction, making the network more efficient.Other marketplaces have already caught onto the PoS concept. 07:19
A digital artist known as Beeple sold a piece of entirely digital art through Christie’s for over $69 million in March, flipping the art world upside down. NFTs may be the future of art — but are they threatening the future of the planet? “This lack of transparency basically ruined two years of efforts.”Seeking a more sustainable option Frustrated digital artists are leading the charge to make NFTs more sustainable, including an effort to reward anyone who can figure out new ways to do just that. Artist Damien Hurst recently launched a collection of NFTs on the Palm sidechain, which claims to be 99% more energy-efficient than PoW systems.”It’s new and art-focused, it’s the most environmentally friendly, and it is quicker and cheaper to use,” Hirst said.PoW chains are one of the biggest issues. In March, the programmer bought the world’s most expensive NFT for $69.3 million.
ROSLAN RAHMAN / AFP / Getty Images
“As our society generally adopts and moves towards technology, and assimilates technology and every aspect of life, it’s only natural for artists, who are commentators on society, to respond and use that medium that’s at their fingertips to kind of explain what’s happening.” Max Moore, who ran the auction house Sotheby’s first NFT sale, told CBS News. “Artists will further commit to offset their historical NFT footprint to create a net positive climate impact.”Offsetra recently launched a tool to help artists and buyers calculate their emissions for a single Ethereum wallet.
“There’s been a significant positive impact from the NFT community,” McGill said. Bitcoin mining alone is estimated to use almost as much electricity as all of the world’s data centers right now.”
Regulating the cryptocurrency industry
Carbon offsets and accountabilityOne of the most common ways platforms and artists have sought to combat their emissions is through carbon offsets. In late March, several prominent digital artists, including Beeple, came together to sell carbon-neutral artwork and raise funds for Open Earth Foundation. But growing demand means creators and buyers are becoming increasingly more responsible for their share of Ethereum’s total energy use, because minting new NFTs causes an increase in emissions if new NFT demand on the blockchain ups energy burn. “Yes, if you’re engaging with Ethereum and other “proof of work” blockchains, you’re legitimately responsible for your portion of the network’s emissions,” said Blockchain for Climate Foundation. They hold a unique string of code, stored on a digital ledger known as a blockchain, and their value fluctuates depending on demand.
Other people can still view the work online, but buyers are interested in claiming ownership of the original — something that was impossible for digital artwork prior to the development of NFTs in the mid-2010s. “NFTs are the first way that blockchain technology has connected with a lot of people,” Dieter Shirley, CTO of Dapper Labs, the company responsible for several popular blockchain platforms, told CBS News. It is responsible for about 21.35 metric tons of carbon dioxide released each year, comparable to the carbon footprint of Sudan. The amount of electricity that mining Bitcoin consumes in one year is equal to that used to power Malaysia, Sweden or Ukraine, according to the Cambridge Bitcoin Electricity Consumption Index. The large footprint is partially due to the many transactions involved with NFTs, including minting, bidding, canceling, sales and transfer of ownership.These emissions are estimated to be 10 times higher than that of an average Ethereum transaction.
“This kind of gleeful wastefulness is, and I am not being hyperbolic, a crime against humanity,” digital artist Everest Pipkin wrote in a blog post.
Industrial cooling fans operate to thermally regulate illuminated mining rigs at the CryptoUniverse cryptocurrency mining farm in Nadvoitsy, Russia, on Thursday, March 18, 2021.
Andrey Rudakov/Bloomberg via Getty Images
When Lemercier dropped six pieces of art on the marketplace Nifty Gateway in November, he was thrilled to see the collection sell out in just 10 seconds. But the emissions generated in the process are also contributing to the destruction of Earth’s atmosphere. You can pay for an NFT with Ethereum, which hit an all-time high last week. And so, it would stink to publish all your NFT’s on a platform that no one’s using in a year,” McGill said. The issue is more nuanced than stating everything is bad,” Köhler explains. “Every time Elon Musk tweets about something, the price goes up.”
Or down. Last week, Musk tweeted that Tesla will no longer accept Bitcoin as payment for vehicles, citing environmental concerns. Kings of Leon recently became the first band to release an album as an NFT. The environmental impacts apply not just to CryptoArt, but to all PoW-based NFTs.
“NFTs are using blockchain platforms, so you could associate their use of the blockchain with the share of the blockchain’s environmental impacts,” Susanne Köhler, a blockchain sustainability researcher at Aalborg University in Denmark, told CBS News.”The environmental issue with NFTs isn’t the NFTs themselves, but the way the network they are built on is secured,” Shirley said. Crypto climate concernsThe growing awareness of NFTs’ environmental impact comes as evidence piles up about the harmful toll of crypto technology. Annually, Ethereum is currently estimated to consume roughly 44.94 terawatt-hours of electrical energy, which is comparable to the yearly power consumption of countries like Qatar and Hungary. “And I think it’s because artists are really socially aware, and especially climate-conscious.” In June, Sotheby’s is hosting its second dedicated NFT auction — after its first sale brought in $17 million — featuring the first NFT ever minted.”Everything we do, all the activity we have in the blockchain, we will always carbon offset it, to compensate for our impact on the environment, in the meantime,” Michael Bouhanna, who is overseeing the upcoming sale, told CBS News. But given the large carbon footprint of NFTs, some believe offsets just aren’t enough to combat the problem. “That’s until you understand the magnitude of the environmental impacts of the current blockchain: It is a DISASTER.” That’s because blockchain technology — which is used by cryptocurrencies like Bitcoin and Ethereum — requires a lot of energy, generating a massive amount of greenhouse gases. What are NFTs? In order to “mint” a piece of art on the blockchain and become the official owner, an exorbitant amount of computing power and energy is used to solve complex puzzles in a process known as mining. Fvckrender / beeple / Kyle Gordon / Nifty Gateway
Several years ago, Ethereum announced that it would move away from the PoW model to an alternative called “proof of stake” (PoS) that rewards users based on how much cryptocurrency they already possess, reducing computational efforts. The shift to “Ethereum 2.0” could reduce the energy consumption of NFTs by 99%, because “proof of stake has basically no emissions,” since it doesn’t require mining, McGill said. But this change still hasn’t taken place, and the community is starting to wonder if it ever will. “People have big reservations using these alternate chains, because chains kind of come and go every season. “If they don’t want to be associated with such an inefficient network, just kind of a wasteful network, then they absolutely shouldn’t mint NFT’s on Ethereum or any other proof of work chain,” McGill said.
Several prominent digital artists came together to sell carbon-netural artwork and raise funds for Open Earth Foundation in March 2021. Whichever miner gets to the answer first gets their unique asset added to the blockchain. The “puzzles” get more difficult to solve as the price of cryptocurrency inflates and more computers are trying to solve them. “One analogy is to think of it like gas cars,” Shirley said. But when the artist, who had been eco-conscious for years, asked the platform about his personal CO2 emissions and energy consumption, he got no response, and decided to investigate himself. “It turns out my release of 6 CryptoArt works consumed in 10 seconds more electricity than the entire studio over the past 2 years,” he wrote on his blog. However, totally eliminating that impact is still farfetched,” Emil Sayegh, cybersecurity expert and CEO of Ntirety, told CBS News. “The industry needs to figure out quickly how to divorce NFTs from crypto-mining, and ensure that NFTs don’t suffer the same issues and volatility that cryptocurrencies do.”
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But recently some artists have started to grapple with the environmental costs of the medium.”With no travel involved, and a mostly digital distribution, this new model looks like it has the potential to become a sustainable practice for artists,” French artist Joanie Lemercier wrote in a viral blog post in February. At that moment, one ETH was worth $4,296.63.The financial gains of selling an NFT are tough to ignore, and not just for artists.An NFT of Twitter CEO Jack Dorsey’s first-ever tweet sold for $2.9 million. In a recent study, scientists warned Bitcoin alone could push the Earth’s temperature 2 degrees Celsius above historical levels, if it were to become as widely adopted as other new technologies.Part of what dictates the total emissions is the current price of the cryptocurrency, and the speculative future value of it. “What governs the price, part of that is due to media attention,” Brendan McGill, co-founder and head of product design and engineering for carbon offset company Offsetra, told CBS News. The proceeds from that sale were put towards the “development of blockchain technology for climate accountability,” and each artist and artwork received 60 carbon offsets.”Each unique carbon offset is pegged to the unique artwork in order to compensate the underlying emissions from the NFT minting,” Nifty Gateway said of the auction.