NFTs | New Villain of the Environment?

A crash course in NFTs and their role in the current climate crisis.

by Sam Vitale Kofman

There’s a new acronym on the block and it’s causing quite a buzz--both for blockchain enthusiasts and environmentalists alike. NFTs--or “non-fungible tokens”--are digital assets that are purchased and traded primarily on the Ethereum blockchain. But there has been a recent flurry of backlash from those who claim that NFT artists are actively destroying the environment, that the power consumption alone will drive us into a global apocalypse. At the other end of the spectrum, proponents of blockchain technology--”the cryporati”--take the energy expenditure in stride, accepting it as the cost of progress.

The truth is somewhere between. There is no denying that blockchains consume tremendous amounts of energy--far too much to justify their benefits--but there may be ways to embrace technology like Ethereum in new and sustainable ways. In this view, saying that “NFTs will kill the planet” is not only reductive, but also somewhat shortsighted.

What are NFTs?

Before we dig into this labyrinth of controversy, let’s start with the basics. The acronym “NFT” stands for “non-fungible token.” Fungible means “interchangeable,” having the ability to swap one instance of an item for another without loss of value. Think, currency: one dollar bill is essentially equivalent to another. NFTs, however, are not interchangeable, in much the same way that the Mona Lisa that hangs on the walls of the Louvre is not interchangeable with the photo of the Mona Lisa that you printed at CVS after your last trip to Paris.

The most striking example of NFTs is digital art work-- everything from shiny 3-d rendered astronauts to the animated Nyan Cat meme that sold for over $600,000 in February. Collectible pixel art, sports plays, and virtual real estate are also widely traded examples. But why do we need the blockchain to trade NFTs? Previously, there was no way to trace ownership of digital assets; as soon as a JPEG made it out onto the interwebs, anyone could copy-and-paste it to their computer. That’s still possible with NFTs, but the blockchain technology that underpins them allows artists to track ownership of their work. When an NFT “sells,” the buyer actually obtains something like a title to the artwork.

How do they Impact the Environment?

Blockchain technology is far from “green.” A study out of Cambridge University estimates that the Bitcoin blockchain alone uses more energy per year than the entire country of Sweden. (Being the largest of the blockchains, Bitcoin accounts for ⅔ of the total energy consumption.) Though Ethereum’s carbon footprint is smaller, it also consumes immense amounts of electricity.


To understand why NFTs consume electricity, we need to understand how they are produced and sold. You can think of blockchains as ledgers, books that keep track of transactions. The difference is that these ledgers require more than a pencil for their record keeping. Transactions are “written” to the blockchain through an energy-hungry process called “mining,” in which people continuously run powerful computers to solve complicated puzzles. How do these computers run? Why, electricity, of course! Current estimates project that each Ethereum transaction uses the same amount of electricity as the average American household over the course of one-and-a-half days

Scapegoating NFTs

It’s easy to condense all our criticism of blockchain into one, easy-to-pronounce acronym, but even if all the NFT markets--like Nifty Gateway, Foundation, and OpenSea-- were to shut down tomorrow, the climate problem wouldn’t be solved. That’s because getting rid of NFTs is analogous to treating a symptom rather than curing the disease. Even without artists selling their art, blockchain server farms around the world will continue to gobble terawatts. The problem is much bigger than these three letters.

A Hopeful Future for Ethereum

There is some promising news on the horizon: Ethereum founder, Vitalik Buterin is actively working to make his creation more sustainable, by moving from its current mechanism to one that would reduce energy consultation by 99%. Currently, Ethereum operates through a Proof-of-Work model, which requires many miners to race against each other, trying to solve complicated computations--and using electricity as they go. An alternative mode, called Proof-of-Stake, operates by forcing miners to put up crypto currency as collateral--rather than by competing against each other based on computing power. They hope to reach this goal by 2022.

But this isn’t the only option for reducing carbon emissions. OpenSea, one of the largest NFT markets, has plans to adopt “Layer Two” Ethereum technology, through a protocol called Immutable X. This means that, instead of processing each transaction on their platform individually, OpenSea will batch them together, thereby reducing the number of transactions that need to occur on the more expensive Ethereum layer. Additionally, Immutable X plans to purchase carbon credits to offset any remaining footprint they do leave.

The Verdict

NFTs bring a lot of value to the art world--by allowing digital artists and game developers to be fairly compensated for their work. They also account for a small percentage of blockchain’s overall energy consumption.

That is not to say, however, that we should be satisfied with a few justifications. Climate change should not be a blame-game, a comparison act of which industry leaves the bigger footprint. It is the responsibility of everyone--including artists minting NFTs and the corporations sustaining them-- to be honest about their individual contributions to carbon emissions--and to take steps to reduce them.

What’s not productive? Flashy headlines that reduce a complicated supply chain of energy consumption to three letters.

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