What is the NFT Environmental Impact? | MakersPlace Blog

What exactly is the NFT environmental impact? Are NFTs bad for the environment? The debate has raged since before JPEG Summer.

As in Politics, so too in Blockchain. Oversimplification creates lightly edutained factions who know only one-sided basics surrounding critical issues.

So: Are NFTs bad for the environment?

The short answer is, “No, not really. But, kind of. And just for now.”

Let’s break that down, one sentence fragment at a time.

NFT Environmental Impact Explained

“No, not really.”

Aspirin, chewing gum, clothing, lipstick, shampoo, solar panels, and toothpaste.

What do they have in common? More often than not, these items are made with petroleum byproducts.

What else do they have in common? Hoards of citizen activists, entrepreneurs, and sustainability experts are creating affordable, renewable alternatives. (I mean, what solar panel manufacturer wants to be hog-tied to Big Oil?)

Just as the above inventions were built using an environmentally detrimental practice, NFTs were invented on a proof-of-work blockchain.

NFTs represent only a portion of the activity on blockchain. As I will explain, the energy output would likely remain relatively stable if every NFT evaporated. However, the fees paid to miners would plummet.

What is proof-of-work (AKA POW)?

A proof-of-work blockchain uses miners to verify and record all transactions on that given blockchain. Blockchains can be likened to ledgers used for storing transactions. Each blockchain is its own ledger, so, for instance, Bitcoin and Ethereum are essentially like two separate internets.

POW, a standard blockchain protocol since before Bitcoin, carries many benefits — primarily security — but the protocol can require a nation-load of energy.

“But, kind of.”

POW blockchains are relatively slow, given the demand placed upon them.

NFT transactions are like every other transaction on a blockchain, and they use as much energy. That said, the queues of POW blockchains — limited to ~15 transactions per second — would still be cloggy without NFTs. (Let it be noted that though Bitcoin’s energy consumption is crazy, you can’t mint NFTs on the Bitcoin blockchain [without a lot of workarounds]).

Lax internet commentary can lead to misinformed assumptions, like “all cryptocurrency is bad for the environment.”

For instance, this New Yorker piece from April 2021 uses the terms “Bitcoin” and “cryptocurrency” as if they were synonymous. This is an egregious error on the level of lumping into the same category a 2009 Hummer and a 2021 Tesla, and it’s a conflation thrown around daily.

It’s more than a semantic oversight. Conflating these terms ignores the dedication and brilliance of so many environmentally motivated developers, some of whom have managed to create carbon-negative cryptocurrencies that were fully operational before the linked article was published.