Why I Won’t Be Making an NFT. For Now.
Updated: Mar 18
Yesterday I was in the process of setting up a podcast about my journey into the world of NFTs. I’ve been interested in blockchain technology for the last decade and I liked the idea of selling my artwork as a digital collectible. It felt like an exciting journey into uncharted land, like stepping into another dimension.
Then I did some research.
If you’re unsure of what an NFT is you are not alone. In brief, an NFT (non fungible token) is a digital asset (jpg, GIF, video, music etc) housed on the blockchain that has metadata attached to it. That metadata is referred to as “minting”. To mint an NFT is to validate its legitimacy and rarity by creating a new block on the blockchain. Like an artist's signature, minting is a proof of authenticity. If I - Missy Dempsey - want to mint and sell my digital artwork as an NFT, the process that provides this authenticity is called Proof of Work. Proof of Work is how a lot of the blockchain remains secure. For this article I’ll be referring to NFTs housed on the Ethereum network.
Proof of Work is like a guarantee that inhibits dodgy deals. Once the process is in action, a complex mathematical puzzle is made into a block. Miners on the network then expend a mammoth amount of computational power racing to be the first to solve puzzles within the block. The more powerful your computer/s, the more likely you are to solve the problems. Miners are rewarded for correctly solving these puzzles. Other miners on the network then verify that these answers are correct. This process of solving the puzzle is recorded as a new block on the blockchain and can be referenced at any time, this is called a ledger. This process is an extremely inefficient use of electricity, but very effective in keeping the blockchain secure.
So how much energy does it take to make an NFT? Memo Akten calculates that the average Ethereum transaction uses approximately 20 kg of Co2. It can take dozens of these transactions to make just one NFT. After analysing 18,000 NFTs Akten found that the average Co2 emission for one NFT is around 211 kg. For a more in depth look at how this figure was calculated please refer to part 2 of Memo Akten’s article.
This estimate doesn’t take into account the additional expenditure of energy needed to bid on or the sale and potential resale of the work (if the work indeed sells at all). These figures are constantly changing and can’t be ignored. According to this article from 2018, the average Australian has a carbon footprint of 15 tonnes of Co2 per year or 41 kg per day. I entered data about how I currently live into this carbon calculator which estimated that my carbon footprint for 1 year is 15.26 tonnes. I live in a small apartment, walk to work and eat a mostly vegetarian diet. If I were to create a set of 10 NFTs and mint 5 of each of them, that would equate to 10,550 kg of Co2 which is equal to approximately 257 days of carbon for me and the average Australian. There isn’t a lot of validated information out there at the moment and I urge you to do your own research. But If Atken is correct, or even in the ballpark of being correct, the thought of generating that much Co2 from selling my digital art doesn’t sit right with me.
Are there any alternatives?
There is another alternative to verify transactions which is less impactful on the earth. It’s called Proof of Stake. Unlike Proof of Work, Proof of Stake doesn’t send a mathematical puzzle out for any miner to try and solve. Instead, an algorithm chooses a miner who has a large stake. The stake is the amount of cryptocurrency they’re willing to risk to solve the puzzle. In return for solving the puzzle, they receive a transaction fee payment. The Proof of Stake method is much more energy efficient as it doesn’t involve numerous other computers trying to solve the problem.
The Ethereum 2.0 network is also set to rollout phase 1 this year and is said to have a better focus on energy efficiency.
For now I’m going to look at some alternative options and continue to learn about this space. Please contact me with any useful info you have or want to add.
Disclaimer: I am by no means an expert in this field, please base your decisions on your own findings and ethics. My opinions expressed here are my own and I hold no judgement towards those who have a different perspective to me.