As evidenced by recent record-breaking, jaw-dropping sales figures (e.g., the artist known as Beeple sold an NFT of his artwork for $69.3 million in 2021), the hype surrounding the digital phenomenon known as NFTs will not be subsiding any time soon. But for all the buzz and hoopla, there is also a rising tide of criticism being levied against NFTs, including mounting claims that they are bad for the environment.
One of the biggest knocks against NFTs is that they require an inordinate amount of energy to make. By one estimation from Computational Artist and Engineer, Memo Akten the mere minting (creation) of an Ethereum based (Proof-of-Work) NFT uses over 142 kWh of energy.
Memo Akten compiled data from 8,000 transactions from the NFT platform SuperRare and these are the averages he found:
- Minting (Creation): 142 kWh, 83 KgCO2
- Bids: 41 kWh, 24 KgCO2
- Cancel Bid: 12 kWh, 7 KgCO2
- Sale: 87 kWh, 51 KgCO2
- Transfer of ownership: 52 kWh, 30 KgCO2
Taking all components, excluding the energy needed to design and create the original piece of art, Memo Akten says the average NFT has a combined energy suck of 340 kWh (energy), 211 KgCO2 (emissions).
The increasing popularity of NFTs can be attributed to the flocks of collectors and investors who see these digital assets as vehicles for turning quick, and potentially large, profits.
Creators and artists are also riding the NFT wave as a means of getting recognized and paid. Together, these forces are combining to create a perfect storm of exorbitant energy use, and here’s how.
How Much Energy does it Take to Make an NFT?
The value of NFTs (non-fungible tokens) stems primarily from their uniqueness and secondarily from their scarcity. Each NFT that is created (or minted) has but one owner and that ownership status can be readily proven. This article explains how you can verify the ownership and creator of an NFT.
Hence, though limitless numbers of copies of a particular digital piece can be made by anybody anywhere in the world, there is only one true original with one verifiable owner.
But the process of making NFTs is similar to the validation of cryptocurrency transactions in that they rely on the blockchain methodology of recording activities. Also known as proof of work (more on this later), this highly complex system of peer-sourced verification is an incredibly energy-intensive process. Here are a few figures from one study that highlight this point:
- On the Ethereum platform (upon which most NFTs are based), each transaction is estimated to consume 48.14 kilowatt-hours of energy
- To put this into perspective, a single Ethereum transaction requires as much energy as a typical household uses in a day and half
Another analysis of the vast amounts of energy consumed by the minting of NFTs demonstrates that it is not just the creation of these digital assets that devours obscene levels of kilowatts but also a host of related activities as well. For instance:
- A typical transaction on the Ethereum platform, such as minting an NFT, has the same energy consumption as operating a refrigerator for a month
- But aside from the minting of an NFT, there are also other related activities such as bidding, selling, and transferring ownership of these digital tokens
- When taken together, a series of transactions emanating from a single NFT can consume a whopping 340 kilowatt-hours (kWh) of energy
- Some NFT transactions are even more energy-intensive, such as the sale of two digital tokens by one artist which was estimated to have used over 175 megawatt-hours (MWh) of power – the greenhouse gas emissions equivalent of one U.S. household measured over a period of 21 years
It is important to note that from an environmental perspective, the value that an NFT sells for is not the issue; rather, it is the energy consumption resulting from the transactions that an NFT spawns that are of primary concern.
Put another way, minting an NFT that sells for $10 million uses the same amount of energy as one that sells for $100 because they are validated the same way.
A potential environmental disaster lurks within a growing trend for NFT creators to release large numbers of lower-priced (i.e., more affordable for the average buyer) digital pieces, rather than limited quantities of higher-priced NFTs.
The more NFTs that flood the marketplace, the higher the number of associated transactions and the greater their cumulative energy consumption.
Plus the amount of money and crypto being exchanged is massive. It takes both and energy and money to create an NFT and if you want to know how much this article will enlighten you:
The Art Community is Taking Notice of NFTs’ Energy Use
As the popularity of NFTs continues to grow, artists and creators are benefitting not only from having a secure means of validating ownership of their original pieces but also from tapping into a digital platform capable of producing highly lucrative results.
In other words, this digital phenomenon is allowing starving artists to board the NFT train to untold riches…at least that’s their hope. The actual amount of artists that are able to make a living even with NFTs is a small percentage.
But some artists are taking it upon themselves to publicize the dirty side of NFTs – the damaging toll they take on the environment through excessive, and highly inefficient, energy consumption.
In the case of a French artist named Joanie Lemercier, he traced the environmental impact of his first-ever NFT drop and discovered these sobering facts about his tokenized pieces:
- Lemercier listed six NFTs for sale on the online auction site Nifty Gateway and they promptly sold for thousands of dollars within a matter of seconds
- These transactions consumed 8.7 megawatts of energy
- An avowed climate activist, Lemercier had committed himself to substantially reduce his energy consumption only to have a single NFT sale wipe out years of progress
- The amount of energy used to power the sale of Lemercier’s NFTs would have been enough to provide for all the energy needs of his art studio for a period of two years
- A subsequent transfer of ownership of the same NFTs has resulted in the consumption of another year’s worth of energy and future transactions are all but certain
As a known climate activist, Lemercier has turned to live, in-person events to display and sell his pieces. As far as digital pieces are concerned, he and other artists are looking forward to advancements in technologies (see below) that will allow NFTs to be minted and sold with drastically reduced energy requirements.
Check out the amazing work of Joanie here.
The Energy Saving Good News
After learning about the ridiculous energy needed to support the cryptocurrency and NFT world I was able to stumble upon the good news in that the future of crypto and NFT is looking a lot better and more energy-efficient.
As we speak Ehtereum 2.0 is being developed and as such it will have the following benefits:
- More Scalable
- More Secure
- More Sustainable
Danny Ryan, the lead coordinator of Eth 2.0 says that the new algorithm will be “99.9% energy efficient.” Plus the Eth 2.0 will be Proof of Stake (PoS) meaning just one computer will be assigned to an Eth 2.0 transaction which equates to better efficiency.
If you are interested in NFT platforms that work with PoS blockchains with less energy cost than Ethereum you need to check these out (this list will be growing into the future):
By all indications, NFTs are not a passing fad. Despite all the mounting criticism (aside from those relating to environmental impacts), NFTs have never been more popular, and greater numbers of artists, influencers, and even celebrities, are joining the fray.
And as more NFTs are minted, bought, and re-sold, the amount of energy required to power these transactions will only increase.
The contribution of NFTs to the overall problem of climate change resulting from rampant energy use around the globe cannot be denied. But as more and more people of influence (like the artist Lemercier, for instance) draw attention to the seemingly unsustainable levels of energy required by NFTs, hopefully, less energy-dependent technologies will be developed sooner rather than later.
Check out a few of our other super popular articles that will help inspire you and educate you on the beautiful world of NFTs.
- NFT Oversaturation: What is It and How to Avoid it
- Just How Hard is it to Sell an NFT? 3 Facts Explained
- Can You Buy an NFT with Ethereum Classic?