NFTs and Environmental Impact: are they really a danger to the environment?

NFTs (non-fungible tokens), are non-reproducible and non-fungible tokens that attest ownership of a unique physical or virtual asset. In just one year, sales increased 200-fold, from 74 million to over 12 trillion in 2021.

Nevertheless, from an environmental point of view, this new form of collecting and exchanging property still has a lot to work on. The majority of marketplaces today are via Ethereum, which operates through a process called mining, which requires a lot of energy. The sale of a single work has an ecological footprint of about 100 kgCO2, which is equivalent to an hour’s flight. Making a comparison, we can deduce that the sale of 100 works can really put a strain on the environment. According to a study by the University of Cambridge, the Bitcoin network consumes about 125 TWh of electricity per year. In turn, Ethereum consumes about 112 TWh.  The energy consumption goes up as each NFT goes through a long path, which increases the initial Co2 consumption. However, the problem is not in comparing one consumption to another, but in adding yet another energy-intensive or inefficient market to a collapsing ecosystem. 

Therefore, even though NFTs in themselves do not cause any pollution, the way in which an NFT is produced creates it. In addition, a high-energy intensity is used to create a single NFT.  The extraction process makes it difficult to use renewable energy. Most NFTs are minted by the proof-of-work method, which uses large amounts of electricity. Any energy-intensive process, cryptocurrency-related or not, can exacerbate climate change by increasing carbon dioxide emissions into the atmosphere. However, there are other, more environmentally friendly methods of minting NFTs, notably the proof-of-stake method, which does not require extensive use of IT.

The British WWF had launched its NFTs, based on digital animations of endangered species, to support nature. However, due to the criticism it received because of the consumption they create, it was forced to stop selling them after less than 48 hours by withdrawing the unsold pieces. The same association in Germany, on the other hand, launched another collection of NFTs, called NFA (non-fungible animals), also dedicated to animals and with which it amassed more than 250,000 euros in funds.

So the question we ask ourselves is: Can NFTs really consume less energy?

According to many scholars, the impact of NFTs is still less than that of art’s side-markets, such as the sale of t-shirts with prints from fast fashion productions. However, it is still not possible to create NFTs that are 100% sustainable. This is demonstrated by the NFTs which, although produced on another Polygon platform using a different protocol, still have an impact on the environment.

A first step is certainly the use of renewable energies such as solar energy. Other sources of energy could also include wind and water. However, using renewable resources would still be scandalous because they could be invested for other purposes. From this, we can deduce the real problem arises when consumption exceeds the threshold of what is reasonable, a level that varies depending on who we are talking to.

Another option could be to invest in experimental technologies aimed at reversing or mitigating the effects of climate change. For example, investing in carbon dioxide reduction could be a good start, not only for the use of NFTs but in general for living in a cleaner world. Another method could be to buy carbon offset credits. In this way, those who invest in NFTs would offset all or part of the environmental impact of an NFT purchase. To do the latter, they would buy carbon-offset credits, leading to a financial incentive that reduces total emissions.

In conclusion, NFTs are not eco-friendly now, but could become through processes that lock in Co2 consumption becoming more sustainable in the future.


Article by: Silvia Galati


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