June 6, 2022
By Sharan Kaur Phillora
Non-Fungible Tokens (NFTs) are an invention unique in human history whose role is fast extending beyond the speculative trends around collectibles to use cases that have a positive social impact.
Through NFTs, a broad range of physical and virtual assets can be authenticated, providing transparency on ownership and underlying attributes of tokenized assets while preserving the privacy of individual owners. The cryptographic guarantees of NFTs make them well suited for use cases such as anti-counterfeiting, provenance tracking, and title transfer.
However, due to the high level of computational power required to mint an NFT on Proof of Work (PoW) blockchains, and the energy required to achieve the necessary computational power — which is primarily supplied by non-renewable fuel sources — the emissions from minting, transferring, and burning NFTs can be quite high.
Studies have shown that a single NFT transaction (including NFT minting) on the PoW Ethereum blockchain releases 124.86 kg of carbon dioxide. This is equivalent to the carbon footprint left behind by 276,733 VISA transactions or by watching 20,810 hours of YouTube videos.
Most of this effect is caused by electricity usage, as blockchain networks are frequently energy-intensive due to their PoW consensus mechanisms. Based on current patterns, blockchain technology will account for 1% of global electricity consumption by 2025. However, not all digital assets qualify as energy-intensive.
Green NFTs could provide a solution to this problem.
Green NFTs use the Proof of Stake (PoS) consensus mechanism, which is less computationally intensive than PoW, among others. Rather than calculating to solve computational issues, in a PoS system, those in control of the blockchain’s upkeep stake (i.e., “pledge”) their currency, putting it in a type of escrow as a guarantee against fraud. If everything goes well, those who stake their tokens may earn a little profit through a share in block rewards.
But this is just the first step. Sustainable practices for NFTs (and for the blockchain industry as a whole) start with reduction. Using renewable energy sources, such as solar and wind, can further reduce blockchain emissions.
NFTs are here to stay, so now is the time for the industry to reduce its carbon footprint and become more sustainable by leveraging existing technologies and carbon offset opportunities.
Image: Wikimedia commons
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.