In recent weeks there has been the inevitable backlash against NFTs. It was inevitable because NFTs are new for most artists and have the added component of cryptocurrency involvement. Money and art have always been a complex enough mix without further complications such as potential environmental impact.
I believe it’s important for artists to be well informed instead of relying on misinformation, whether spread by accident or willingly. What’s unfortunate is there is a significant amount of bullying on social media by other artists not prepared to gain a deeper understanding or any awareness of the affect on mental health they’re having on fellow human beings.
In order to understand the true environmental impact, let’s first say what an NFT actually is.
NFTs are a digital representation of ownership and provenance powered by decentralised networks.
The first of these networks to exist, Bitcoin, relies on something called proof of work (PoW) to function. PoW performed an at the time irreplaceable function integral to Bitcoin, and PoW uses energy as fuel by design.
Only one of the common NFT platforms uses energy as fuel, Ethereum, none of the others do. This is because Ethereum is an older platform. No major blockchain platform released in recent years has an environmental impact but they do have other trade offs, too complex to go into this primer. As such, artists can already choose to avoid the problem altogether since it isn’t inherent to NFTs. However, Ethereum is the most significant NFT platform and for very good reasons – the largest community by far of developers, creators, and applications. Some alternatives, which may be used increasingly in coming months, are closely linked with Ethereum. We call these layer 2 solutions since they can be considered to sit above Ethereum.
That said, Ethereum is leading the way with moving away from using energy as fuel and it’s been a long, difficult process. It’s important that this incredibly tricky engineering effort is allowed to be undertaken without undue rush, since the cost of mistakes would be enormous. Ethereum isn’t changing just for environmental reasons, there are numerous other improvements as part of the same work, including a very significant lowering of costs to use the platform. The change will be complete in under two years, if not a lot sooner, and there are numerous public discussions, source code repositories, and events covering what’s called Ethereum 2.0. This is because ethereum is an entire public project, 100% transparent and made by its community. There is no benefit to this community of using energy as fuel and users want to do away with it as soon as possible.
Q: Since ethereum does use energy to power itself, does that mean NFTs use an enormous amount of energy too?
A: No! An NFT has negligible power use and hence no measurable environmental effect.
You will have read otherwise, but that’s down to a misunderstanding of the technology. This is where blockchains get complicated because they’re weird beasts, tricky for even hardened engineers to truly grasp. I’m not joking when I say it took me a year to fully grasp all the ramifications. I’ve been at this nearly 9 years and I’m still learning.
Ethereum is going to use the energy regardless of however many NFTs are being used. If all NFTs moved to another platform today, the effect on Ethereum’s power probably would not even be measurable. Although I see it being poorly expressed or poorly understood, the train analogy is still one worth providing.
Ethereum is like a train that runs regardless of its content. However, in ethereum’s case the carriages are all full and the stations have massive queues of passengers. Removing a few passengers, our NFTs makes no difference. Ethereum is full and has been for a long time now. The only reason we can use it at all is because the passengers boarding the train are picked because they are paying the most. Other passengers either have lengthy waits or don’t even bother to turn up. If NFTs weren’t minted on Ethereum, some other passengers would take their place, and more passengers would turn up as well.
Here’s a fantastic visualisation which may help artists to understand this: https://txstreet.com/
When people say that NFTs use a lot of energy, they’re measuring one thing and declaring it a measure of something else. It’s not that NFTs use energy, it’s that Ethereum uses a lot of energy compared with the amount of work it can do, i.e. it’s a measure of efficiency not of energy use per NFT. Ethereum is extremely inefficient.
This may seem like a fine line, and it is peculiar for sure, but it’s a critical one because adding or removing NFTs does not affect the environment. It is not burning trees, and it is not using up decades’ worth of electricity. When I see such comments aimed at artists, it’s disappointing because I’m actually an environmentalist as well as a blockchain expert. I even have a small qualification in it, which I suspect is more than most of those commenting negatively on the topic. This kind of dialogue, not to mention abuse of data, is deeply unhelpful to the environmental movement and we know that scare tactics don’t work, anyway.
I find it even more peculiar given that the existing art world uses plenty of resources, whether making t-shirts, mining for gems to use in jewellery, shipping artwork around the world, paint manufacture, and so on.
The upshot is we don’t change the environment by blaming artists and consumers; we change it by forcing large corporations to change their behaviour, by providing new technology for recording environmental impact, and by supporting sustainable, environmentally beneficial projects and communities.
That said, Ethereum itself is bad for the environment and use of renewables cannot fix that, only make it less bad. However, we need the work being done on Ethereum to show Bitcoin and other older projects how they can change because they use far more energy than Ethereum and have no plan to change.
We need to stop attacking both artists and Ethereum, instead being proactive and supportive, as well as making efforts to do any carbon offsetting that we can in the mean time. However, if you still feel particularly strongly, more and more alternatives are coming.