In case you missed it, NFTs (non-fungible tokens, which doesn’t necessarily clarify much if you haven’t wrapped your head around what they are all about) have become a thing, and the market for them is growing. Whether they are in the form of photos, digital art, videos, audio files or even those cringeworthy Awkward Family Photos, the market for NFTs is surging at a breathtaking pace. From Grimes to LeBron James to Jack Dorsey, just about anyone who’s a big-time or small-time anyone, in any industry, is churning them out — and many NFTS are going for a very pretty penny.
So why buy something non-fungible when you can buy a fungible item like a unique artistic masterpiece or the epic white dress that Marilyn Monroe wore in “The Seven Year Itch?” Well, fans and buyers of NFTs will tell you they are a unique digital asset that can be traced to the original owner. After all, reproduce a Modigliani or a Fendi. The same logic applies to a baseball card from decades ago, or a recreation of Lil Nas X’s “Satan” shoes.
But NFTs are stored and verified through the use of blockchain, which to date makes them impossible to fake — and therein lies a problem, as chatter about their collective climate impact is growing almost at the rate of their value.
All those digital transactions and algorithms that allow for the running, monitoring and verification of blockchain, including bitcoin trading, amount to what critics say is a massive carbon footprint. According to at least one tracker that gauges the energy consumption of the global bitcoin market, the trading of bitcoin alone is requiring more and more power. One recent study suggested that the bitcoin market uses as much power as the all the world’s data centers; another study suggested the industry requires more energy than producing all the gold and copper mined in the world.
Now the focus is turning to the energy consumption that’s fueling the rapid rise of NFTs; one profile on Wired, for example, describes the shock of one NFT artist when he learned that one of his pieces of crypto-art required as much power as his studio consumed over two years.
Further, as Justine Calma wrote for The Verge last month, “Famed auction house Christie’s just sold its first 'purely digital piece of art' for a whopping $69 million. For that price, the buyer got a digital file of a collage of 5,000 images and a complex legacy of greenhouse gas emissions.”
Estimates of how much energy an NFT requires are all over the map. One observer suggested that a collection of Grimes’ NFTs used as much energy as a citizen of the European Union would use in 33 years. Another concluded that a single-edition NFT used as much energy as a typical European household. We’re not talking about online banking or even binging on Netflix — a lot of energy is needed to power these digital masterpieces, and critics have also pointed out that the data centers that allow them to exist are often in countries where regulations are lax at best.
Headlines such as “Ukraine to Set up a Large-Scale Crypto Mining Data Center in a Nuclear Power Plant” don’t exactly paint this world in the most flattering light, either.
The bottom line is that more artists who create NFTs, as well platforms on which they are sold and traded, know that they have a climate action challenge on their hands — and they are beginning to respond in kind.
For example, Nifty Gateway, one platform on which NFTs are sold, says it’s working on a plan so that it can stay compliant with the Paris Agreement — details on how that will occur are currently vague. There’s also talk of a global “Crypto Climate Accord” that could help reduce the industry’s carbon intensity. The worlds of blockchains and NFTs know action is needed, but the total amount of emissions for which this sector is responsible means there is no easy solution such as carbon offsets, which Gizmodo’s Brian Kahn has described as “at best, self-deception and at worst, greenwashing.”
Image credit: Anni Roenkae/Pexels
Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.
Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.