The hype about crypto art has triggered a climate controversy due to the supposedly high energy consumption - but there is hope for a green crypto development
Author: Sarah Marie Lau
Millions of dollars for a digital art work - this sounds unimaginable, but came true for the 3D artist Beeple. In Christie's first auction for NFT (Non-Fungible Token), his digital art work cracked the spectacular $ 69 million mark. Emotional and personable when the artist start crying after the auction is over in the arms of his wife! This picture shows what difference new technologies can make for creative people and artists .
But there is a lot of criticism around the supposedly high energy consumption of NFTs. Thus NFTs are seen as bad for the environment. But what is Crypto Art anyway, why is the energy consumption so high and is there any sustainable alternative? Here are all the facts about NFT and the environmental consequences.
The technological revolution of crypto is facing a problem
NFTs have a supposedly massive CO2 balance , due to underlying blockchain and crypto technology. Public voices became loud in 2018, when Alex de Vries, the author of Digiconomist, in a study estimated the annual consumption of Bitcoin to be equivalent to Ireland's total annual consumption. Problematic especially for the environment, because this energy comes mainly from fossil fuels.
For artists and creatives, NFT Art is still a revolution, for others it is another energy and therefore energy environmental problem. Immediately after Beeple's million dollar deal became public, the NFT boom picked up again with the sale of other tweets and gifs. This could mean a turning point for many artists, collectors and investors.
Source & Copyright by https://immediateedgeapp.org/
NFT is bad for the environment, but attractive to artists
NFTs offer the first opportunity to equip a digital art work with an owner certificate, that can never be cracked or deleted and at the same time involves the artist in every further sale. The artists thus have the opportunity to protect their digital art, sell it on a digital market and earn money from the art trade. This was never possible before.
What is an NFT and where does the high energy consumption come from?
An NFT is a digital certificate, a cryptographic token that binds the owner and originator to a unique asset, making it ideal for the digital art market. Compared to fungible tokens, NFTs are not exchangeable and are therefore protected against copies and destruction. NFTs are based on blockchain technology, the best-known blockchain application is the digital currency Bitcoin - which as currency however is a fungible token. Blockchain is a cryptographic encryption technology that continuously chains data sets with one another.
Source & Copyright by The report of Statista
Most of the NFTs are stored on the Ethereum blockchain. Ethereum has declared itself to be the standard protocol for non-fungible tokens. In contrast to Bitcoin, Ethereum is not a pure cryptocurrency, but also a platform for creating, managing and executing decentralised programs such as crowd funding or online-voting. All of these processes consume a lot of energy and therefore have a poor CO2 balance.
One key challenge is University of Cambridge Center for Alternative Finance (CCAF) , estimates the energy consumption of Bitcoin at around 137 TwH p.a. (as of March 2021), which is comparable to the energy consumption of whole Sweden. In a direct comparison, however, countries such as China consume around 6.500 TwH, the USA around 4.000 TwH and Germany around 520 TwH annually.
In conclusion this promising new technology must be declared as environmentally unfriendly and not sustainable. But the digital clock is ticking quickly, and the first solutions for sustainable blockchain technology are emerging slowly.
Reconciling NFT and the environment - is there a sustainable solution?
The carbon footprint of digital technologies and thus of NFTs is undisputed. While critical voices recommend avoiding NFT Art from the Ethereum Universe or NFT Art entirely, there are also movements and possibilities for a more sustainable approach. Here are the best examples:
- Invest in Jason Bailey's Green NFTs Campaign: The Green NFT's Bounty System is committed to pay attention to green technology and the development of sustainable NFT systems. The bounty system is comparable to a crowdfunding campaign, where you can donate directly to the organisation.
- Observe the proof-of-stake process: The Proof-of-stake process is much simpler in terms of computing power and thus energy consumption and the carbon footprint can be reduced. This process is currently being developed in the Ethereum network and gives hope for a more environmentally friendly digital technology based on Ethereum.
- Investing in underdog blockchain technologies: Especially in those who focus on sustainability from the very beginning. The Github List Eco-NFT shows already sustainable underdog NFT and blockchain technologies.
Green crypto development gives hope
It is therefore worth taking a closer look, not only when choosing the NFT type, but also when choosing the technology based on it. Crypto is still something to keep on the watch-list, early entry is worthwhile thinking about and the green crypto examples give hope for a sustainable development of this digitization.