How bad are NFTs for the environment?

On 8 March, 2021, online marketplace ArtStation made an announcement so controversial that within just a few hours it was forced to publicly apologise.

“We are very sorry for all the negative emotions this has caused,” read a statement issued by the firm. “We clearly made a mistake and admit fault. It was our bad.”

The apology came in response to online backlash against ArtStation’s intention to launch a new platform for non-fungible tokens (NFTs) – a multi-million dollar trend that has faced severe criticism from environmentalists since gaining mainstream attention in 2021.

While some within the art world claim that NFTs are a fad with no inherent real-world value – the digital artwork sold can still be copied and shared for free by anyone online – climate activists warn that the environmental impact they have is very real.

“We feel that NFTs are a transformative technology that can make significant, positive change for digital artists,” concluded ArtStation’s statement, confirming the new project would be scrapped. “It’s our hope that at some point in the future we’ll be able to find a solution that is equitable and ecologically sound.”

The controversy stems from the underlying blockchain technology that supports NFTs, which is a form of online ledger that also enables cryptocurrencies like bitcoin.

In order to exist, cryptocurrencies and NFTs therefore require a network of electricity-consuming computers in order to power their blockchains.

Bitcoin’s environmental impact has been well documented, with analysis from the University of Cambridge suggesting that its network currently consumes more energy than the whole of the Netherlands.

Research on the energy demands of NFTs is less established, and has itself proven contentious among those involved in the crypto industry. A website set up to track the environmental impact of NFT markets was shut down in March, with the founders of CryptoArt.wtf claiming the site had been used “as a tool for abuse and harassment”.

The site’s founder, digital artist Memo Akten, had calculated that the average NFT has a carbon footprint equivalent to the monthly footprint of someone living in the EU.

Other estimates claim that “selling an edition of 100 works has a carbon footprint of over 10 tonnes CO2, which is more than the per capita annual footprint of someone in the EU – including all emissions from industry and trade”.

One of the most famous artists to have profited from NFTs is Beeple, whose work Everydays: The First 5000 Days sold for $69 million through Christies auction house earlier this year.

Beeple has pledged to make his artwork carbon neutral or negative by investing his gains in renewable energy and carbon capture projects.

But there are other ways to make NFTs more environmentally friendly beyond simply offsetting the emissions.

Firstly, the blockchains could be powered from renewable energy sources – something that is already occurring thanks to a crackdown in China on coal-guzzling server farms and the emergence of green alternatives.

The second, more immediate, solution is to switch the blockchain’s algorithm from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This approach, which the world’s second most valuable cryptocurrency ethereum is looking to move to, does not consume any power as the ledger is secured through users “staking” their own cryptocurrency tokens.

“There are more sustainable routes emerging,” a collective of artists including Memo Akten wrote recently in a ‘Guide to ecofriendly CryptoArt (NFTs)’.

“Hopefully as more artists migrate to these emerging waters, this can encourage platforms, developers, investors and collectors, to bridge to develop more ecologically friendly and transparent platforms.”

Ultimately, as with ArtStation’s abrupt backtrack, it will likely take collective outrage for any real change to ever happen.