On March 23 of this year, the first-ever published tweet, shared back in 2006 by Twitter founder Jack Dorsey, was sold for $2.9 million. The tweet was sold as an NFT, a non-fungible token. In the same month, Christie’s auction house sold its first-ever NFT artwork — a collage of images by digital artist Beeple for a whopping $69.3 million. Even a video clip of a LeBron James slam dunk sold for over $200,000 and a decade-old “Nyan Cat” GIF went for $600,000. To understand the concept of NFTs requires a little technology lesson.
The term non-fungible token is sometimes used to refer to a certificate that states that you are the original owner of an artwork or a physical good. Non-fungible tokens or NFTs are cryptographic assets on blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can be used as a medium for commercial transactions. NFTs can take the form of GIFs, tweets, virtual trading cards, images of physical objects, video game skins, virtual real estate and more. The easiest context here is with digital artwork. This is different from physical art, where the owner has an original copy and all others are replicas. With digital art, the original copy can be used and shared by millions of people at the same time.
NFTs can bridge the gap between physical and digital art by allowing people to prove that they own a piece of digital artwork. They are ideal vehicles to digitally represent physical assets like real estate and artwork. Because they are based on blockchains, NFTs can also be used to remove intermediaries, simplify transactions, and create new markets. They are great because the certificates are transparent and can be accessed and validated by anyone in the blockchain ledger.
NFTs have been around since 2013. However between 2020 and now, they have broken into mainstream consciousness. Like any new technology that has a chance of creating wealth, NFTs have soared in popularity and acclaim. It has been declared that NFTs will change the face of art and digital ownership forever. As the world rages over the monetary and social impacts of NFTs however, it’s potential impact on our environment is barely getting any attention. While the art world debates whether NFTS have any real value, environmentalists say the mining that makes them possible is just another way humanity makes money by polluting the planet.
The biggest issue here is that NFTs run on blockchain technology. Now blockchain technology consumes immense amounts of electricity. Other blockchain-based technologies have already been shown to be bad for the environment by virtue of their intensive power consumption. The environmental impact of Bitcoin has been widely documented, with Cambridge University estimating that its network consumes more energy than the entire Netherlands.
One 2018 study found that cryptocurrency mining consumes more energy for every dollar of value generated than extracting gold or copper. Ethereum mining consumes about 26.5 terawatt-hours of electricity a year. That does not seem like much until you realise that that is nearly as much energy used annually by the entire country of Ireland. Most NFTs are on the Ethereum network.
While research into the energy consumption of NFTs is not as definite yet, findings so far have been concerning. For instance, back in December 2020, digital artist Memo Akten set up Cryptoart to track the power usage of NFTs. According to Akten, the carbon footprint of an average single-edition NFT is equivalent to driving a car for 1,000 kilometers, and for higher editions, the figures are equivalent to dozens of transatlantic flights.
Like a lot of new technologies, NFTs seem to be the exclusive reserve of the tech world. What this has created is a situation where if a person speaks against NFTs, there is often open hostility towards the person. The person is branded “unprogressive” and promptly reminded that “NFTs are the future”. However, it is important that we hold the conversation on sustainability because while tech bros might see it as their domain, the effects impact us all.
On March 8, online marketplace ArtStation announced that it would start trading NFTs. The announcement was so controversial and met with such public outrage and disapproval that within just a few hours, ArtStation was forced to publicly apologise. Some platforms are already trying to turn to eco-friendly ways to mint NFTs, such as by using hydroelectricity in areas like Sweden and Norway. The platform GitHub went as far as having published its own memo on how and where to sustainably create and curate NFTs. But the sustainability and lengths of these measures are not fully known as of yet.
What we do know is that the NFTs market is already a multi-billion dollar market ready to be mined. It might be volatile but it’s still young and so the industry is expected to grow larger with time. Its recent boom is raising fresh awareness of crypto’s environmental toll, and there’s a chance that activism could lead to real change. Public outrage alone will not make companies abandon this industry. The only hope, at best, is that it drives them to figure out more sustainable alternatives to this latest innovation.
If not for the environment, at least for their pockets.
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Cover image by Dan-Cristian Paduret.