The NFT industry rides on the narrative of empowering content creators for increasing demand. Investors and crypto enthusiasts have poured hundreds of millions to make the most of the boom. However, the carbon emission by different NFT projects has triggered major concerns among environmentalists. The inquiries related to carbon footprint are evolving into a controversy. NFT transactions surged 21,350% from $82.5 million in 2020 to over $17 billion in 2021. With the skyrocketing demand, the environmental impact of digital collectibles is only going to increase. Therefore, it is important to address these concerns on priority.
What Is An NFT?
An NFT (Non-Fungible Token) is a digital representation of unique real-world objects like art, music, game skins, videos, etc. NFTs are bought and sold online with cryptocurrencies. Creating digital scarcity is what empowers the NFT market. Pak’s ‘The Merge’ is at the top of the list of the most expensive NFT ever sold at $91.8 million.
In order to make NFTs accessible to traders, it is necessary for creators to add them to a blockchain. The process of adding an NFT to a blockchain is known as minting. It is minting that continues to trigger concerns in the minds of environmentalists.
How Much Carbon Dioxide Do NFTs Produce?
Just like crypto mining, the environmental impact of NFT processes is on the radar of environmentalists. And, there are enough numbers to justify these concerns. According to a study, adding an NFT to a blockchain uses nearly 83 kg of carbon dioxide. Even submitting a bid produces 23 kg of CO2. The sale of a digital collectible produces 51 kg of CO2 whereas a transfer produces 30 kg of CO2.
All the major collections and exchanges have a major share in these emissions. For instance, the net carbon emissions by CryptoKitties NFT collection stand at 239.83 million kg. Leading gaming universe Axie Infinity’s carbon emissions stand at 27 million kg. Similarly, The Sandbox’s net carbon emissions collection is 11.6 million kg.
The Cost Of NFT Energy Consumption
Planting more and more trees is the only traditional way effective enough to offset NFT energy consumption. According to research, it requires at least 1.37 trees to offset the sale of one NFT. As of 2021, there are more than 2.5 million crypto wallets holding or trading NFTs. According to Dune Analytics, NFTs worth more than 13 million have been sold so far. Therefore, almost an acre of forest is required to offset the carbon emissions of nearly 1,764 NFT trades. But, how many forests are too many forests? Also, NFT collections making millions of dollars couldn’t care less about creating or reviving forests. Hence, technology once again emerges as the last resort.
Greener Earth With Blockchain
For every challenge that emerges in the blockchain space, the technology seems to have a solution. While planting more and more trees is still the key to cutting carbon emissions, we need to look for innovative solutions to tackle carbon emissions. The World Economic Forum believes that blockchain technology can play a crucial role in beating climate change. Several projects continue to explore the potential solutions to carbon emissions in the blockchain.
For instance, the leading gaming ecosystem VulcanForged has started the Elysium blockchain initiative to offset the carbon emissions using tokenized trees. The plan is to create a positive impact on more than 70,00 acres of land. Specially designed for crypto gaming projects, Elysium aims to emerge as a carbon-neutral blockchain, a first of the many.
The NFT ecosystem is growing substantially and innovators need to prioritize tackling the carbon emissions from various activities. There is a need to create a balance between innovation and sustainability to bring the necessary change.