NFT Energy Consumption

by Rohan

You might have definitely heard about NFTs or Non Fungible Tokens. Either way I shall take this chance and elaborate that NFT stands for non-fungible tokens, which are typically made using the same kind of coding as cryptocurrencies. They are not exchangeable or tradable in the similar to other cryptographic assets.

Computerization and the realm of commercial art are coming together thanks to non fungible tokens, or NFTs. The tokens are a cryptocurrency, just like Bitcoin. Each token has its own different value rather than maintaining a constant value. NFTs themselves have little environmental impact, but how they are produced can have a significant impact on the environment. 

Imagine if Ethereum and Bitcoin united and formed their own country (The United Nations of Bitcoin and Ethereum), it would have the twelfth-highest NFT energy consumption of any other nation. Every day, the Ethereum blockchain produces hundreds of transactions. One transaction consumes as much energy as a typical household does over the course of two days. It thus considerably raises the amount of energy used worldwide. The blockchain’s proof-of-work (PoW) security system consumes enormous amounts of energy. The unique and exclusive rights to the digital artwork are yours when you buy an NFT. PoW stops the piece from being duplicated or spent twice. 

Are you still wondering how much NFT Energy Consumption occurs? 

In short, it takes more than 260 kilowatt hours to mine an NFT on the Ethereum platform, which is equivalent to the energy used by the typical American home over the course of 9.05 days.

Reason of NFT Energy Consumption

The NFTs on the Ethereum blockchain use a lot of energy because of the proof-of-work conesus algorithm. The NFT tokenization is being verified by a large number of miners, but only the first one will be rewarded for their efforts with a commission; the energy expended by the other miners will go to waste. Miners fight with one another and be the first to finish the algorithm and receive payment for cracking the blocks because proof of work is a difficult, energy-intensive procedure. It can be said that the miners are engaged in an “arms race,” with those with higher processing power completing random algorithms more quickly and earning the reward. Ethereum aims to move away from proof-of-work and toward proof-of-stake. Blockchain transactions are validated through the proof of stake consensus procedure (PoS). Though it is regarded as a proof of work alternative that is better for the environment, Ethereum does not currently employ it. PoS conserves energy because a validator is selected to confirm a transaction rather than miners competing with one another. The environmental implications of Bitcoin and Ethereum mining are already at their highest levels ever, despite the fact that future cryptocurrencies are already moving in that direction and that Ethereum is working in that direction. On a proof-of-stake (PoS) blockchain or utilising a low-carbon minting procedure, green NFTs are created.

The cryptocurrency art market will collapse in the absence of buyers. For financial success, miners must adopt sustainable practices and renewable energy. Their influence may eventually enable the NFT sector to become carbon-neutral.

A Fun Fact on NFT Energy Consumption : 

Energy usage for Ethereum exceeds that of the Netherlands. a yearly excess of 100 TWh. The carbon footprint of the blockchain is greater than Singapore’s, coming in at roughly 50–60 million tones of CO2 annually, or almost twice as much pollution as the largest coal-fired power plant in Europe.

Solution to NFT Energy Consumption : 

Environmental experts and engineers look for long-term fixes to the major pollution issue caused by cryptocurrency. Energy consumption in the NFT sector is largely driven by data mining. It may be environmentally damaging to buy NFTs from coal-driven mining platforms. Additionally, you can investigate the cryptography behind digital artwork to be sure your purchase will have a little impact. Elon Musk recently described Bitcoin’s ideas for utilizing renewable energy. China accounted for more than 75% of bitcoin data mining in 2020. Coal is used to power 40% of China’s cryptocurrency mining operations, which results in significant greenhouse gas emissions. The limited regulation of cryptocurrencies restricts the power of investors to shape energy sourcing. 

Artists like Joanie Lemercier are initiating action as a result of the excessive energy usage of NFTs at this moment. Lemercier recently postponed the release of six works after estimating the cost of electricity, according to widely circulated reports in the popular press. This French artist understood that the sale would consume as much energy in ten seconds as his workshop did in two years!

Elon Musk set a target of using 50% renewable energy for mining. NFTs can greatly lessen their environmental impact by using clean power. A global shift will, however, require time, stringent regulations, and public pressure. Investors in NFTs can acquire carbon offset certificates to protect the environment of their NFT purchases. Even if buying carbon credits doesn’t truly cut down on carbon dioxide emissions, it does give other people a financial incentive to cut down on their annual total emissions. 

The Solana Foundation hired a climate and energy expert in May 2021 to help clarify how transactions made on the Solana decentralised blockchain would affect the environment. The safety of the Solana network is independent of energy use because it is a proof-of-stake network. This platform does not require mining, which consumes a lot of energy, making it very eco-friendly.

Conclusion 

According to estimates based on the current Beacon Chain, the switch from proof-of-work to proof-of-stake for Ethereum could reduce energy consumption overall by 99.95%. Proof-of-stake uses 2000 times less energy than proof-of-work. Each node on the Ethereum network will use about as much energy to operate as a cheap laptop does.

NFTs are a fantastic opportunity to support creatives all across the world, generate money for deserving charities, and accomplish a lot more. They bring with them fascinating arguments about how society creates value and how our psychologies operate. They confirm the notion that art is an integral part of human culture. We can do better than to let misunderstandings about the technology such interactions cloud them. And there are already several greener and sustainable ways to reduce the NFT Energy consumption and protect the environment, because the fact everyone knows but ignores, there is no Planet B!

ALSO READ :- EVERYTHING ABOUT BEEPLE NFT ART

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