A Peek Into the Darkside of NFTs (Part I)
In 1855, Alexander Parkes created a semi-synthetic material called Parkesine. This material would eventually lead to the development of celluloid — the first synthetic plastic — and the birth of the plastics industry. In its infancy, the proposed uses of plastic were quite benevolent. John Wesley Hyatt, an early innovator in plastics, hoped to substitute the ivory-derived billiard balls (as billiards was quickly growing in popularity) with his newly developed synthetic polymer — eliminating the need to kill wild elephants for their ivory. Plastics have also been used to extend the lifespan of fresh produce, reducing food waste. Furthermore, it provides many societal benefits for health, safety, and energy savings.
However, its negative impact on the environment can’t be overstated. Plastics have been heavily scrutinized and demonized — and rightly so due to their nearly infinite lifespan and adverse impact on global ecosystems. However, this scrutiny has sparked the development of plastic alternatives that don’t have such a malignant environmental footprint.
NFTs, despite their youthfulness, are undergoing the same lifecycle as plastics, albeit at an accelerated rate. They were first touted as a powerful tool that could empower artists, particularly digital artists, which had been oft-overlooked in the world of art. It is an instrument for them to participate in the same sort of activities that traditional-form artists can — most notably the sales of authentic work. In addition to legitimizing digital artists, NFTs can also help authenticate physical artworks, and the tokenization component has a plethora of uses outside the world of art as well.
But, just as plastics became scrutinized, so too are NFTs. They have been attacked as being environmentally irresponsible as they are extremely energy-intensive, which has even led to some artists leaving the NFT space. Additionally, some other existing issues with NFTs are the complicated and expensive “minting” process, possible loss of NFT in the case of a server disruption, and even false ownership & copyright issues.
Energy Consumption
If you are familiar with NFTs at all, you’ve most likely heard that they are very energy-intensive. But what is it exactly that makes them use so much energy? The main reason is that most NFTs depend on an Ethereum blockchain — which uses A LOT of energy. The annual energy consumption of the Ethereum network is 113.38 TWh per year- comparable to that of the Netherlands. It’s this massive energy consumption that has caused some artists, like Joanie Lemercier, to cancel their NFT releases stating environmental concerns.
This problem is inherent to the Ethereum network as it uses so much energy because the PoW (proof of work) system that it’s based upon is literally designed this way. In the most basic sense, the ‘work’ in this system is the advanced computational puzzle that must be solved. This puzzle is supposed to be prohibitively expensive for ill-intentioned parties to make illicit alterations to the blockchain, which is what provides the secure and anonymous transactions that Ethereum and Bitcoin are known for. And these costs come in the form of energy expenses. So, even if a ‘miner’ (the computers that solve the complex computational puzzles) is using a more energy-efficient computer chip, or using cheaper energy, they would have to use more energy to make up for the lower cost of it. While using renewables can help to address this, it’s still consuming energy that could be better used elsewhere.
The bygone website cryptoart.wtf allowed users to estimate the greenhouse gas emission associated with individual NFTs but has since been taken down. While the platform was “intentionally one-sided” to demonstrate how much energy a single NFT may use, but it’s actually very difficult to say exactly how much. One can really only extrapolate estimates from the gross energy consumptions by the total number of NFTs minted or bought and sold. While the estimates may not be exact, any use of the Ethereum blockchain contributes to the total energy consumption.
However, NFTs themselves aren’t actually energy-intensive, only the network they are based upon is. Clean NFTs, which is made up of a community of over 2,000 artists around the world, has compiled a list of cleaner NFT marketplaces. These marketplaces don’t use the PoW system, but rather the PoS (proof of stake) that effectively eliminates most of the energy consumption associated with not only NFTs but the blockchain itself. Even the Ethereum network plans to eventually shift to a PoS consensus mechanism in 2021 or 2022. In layman’s terms, the ‘stake’ is the number of coins a miner has. Having more coins means they have more mining power because they have a higher ‘stake’ in the coin, hence the term proof of stake. However, only time will tell if the developers behind Ethereum will really make the move, or if it’s just smoke and mirrors.
Click here for more information on proof of work (PoW) versus proof of stake (PoS).
Follow for part 2!
By Tres Kitzmiller, 2022
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