Why NFTs are Bad for the Environment

What is an NFT

An NFT, or Non-Fungible Token, is a unit of account that creates a digital impression of any unique item. Among them can be paintings, photographs, videos, music, gifs – any content that claims to be at least some kind of uniqueness. They are highly prized among collectors, gamers, and art lovers, and are bought and sold through auctions.

These same tokens are stored in the so-called blockchain—a huge chain of blocks, each of which contains information. Unlike, for example, servers, where data is stored in one place, these blocks can be located on many devices in various parts of the world.

This kind of encryption makes the blockchain very difficult to hack because at best you will be able to hack just one block of information, and not the entire chain. That is why most cryptocurrencies work on the blockchain.

A token is just a record in one of the blocks, and, as a rule, there can be a lot of such records of the same type. For example, each individual Bitcoin is an exact copy of another such Bitcoin, which makes it possible to compare them with a currency.

But what if you need to create a unique token that has no analogs? The answer is NFTs.

Non-fungible tokens are a way to transfer unique items from the real world to the blockchain. Each of these tokens is unique, inseparable, and exists in the singular. In addition, all the necessary information about it is securely stored in the blockchain.

Uniqueness may vary. So, the very first SMS was sold for 150 thousand dollars, and the first tweet of the founder of Twitter, Jack Dorsey, was sold for almost 3 million. To publish your art you should go to an NFT marketplace.

How do NFTs impact the environment?

The environmental impact of NFTs is an issue affecting the entire crypto business. Most NFTs use the Ethereum blockchain, which confirms each new block using a Proof-of-Work approach. This means that networked computers (i.e., miners) compete to find a solution to a complex problem. The right to confirm the lock is granted to the first computer on the network that solves it, and they also receive a reward. They also receive a gas fee for every transaction in a block.

Where do NFT emissions come from?

The importance of finding a solution in the Proof-of-Work system increases with the price of ETH and gas. As a result, miners are motivated to spend more money on computer hardware, which increases the demand for electricity from the grid. The environment will suffer if energy is produced without any environmental safeguards against sources that emit greenhouse gasses or otherwise damage the ecosystem and change the climate.

But it’s hard to pinpoint exactly how NFTs impact the ecosystem. Only a small percentage of transactions on the Ethereum blockchain are NFTs. It is not clear if they significantly affected the amount of computing power that miners put into the network to solve these complex problems. NFTs are expected to have some impact, although it may not be as significant as the general increase in the popularity of cryptocurrencies and decentralized finance (DeFi).

How much energy do blockchain and NFT use?

The token space consumes as much electricity as the entire country of Libya. With NFTs, their growing demand and increase in transactions will further point to profit opportunities for miners, leading to more emissions.

A carbon footprint is a rough estimate of all the carbon emissions emitted into the atmosphere during the creation and consumption of a product. There are many factors and factors that influence carbon emissions, from renewable or fossil fuels to the production of a carton of milk. Therefore, as responsible citizens of the world, people now agree that individual responsibility for carbon emissions is essential.

However, since it is difficult to calculate the exact dimensions of these numbers, they usually contain an estimate. However, they are sufficient to calculate the environmental impact of NFTs. According to the Digiconomist website, a single Ethereum transaction consumes over 70.32 kWh, which is enough to power 1 US family for two and a half days. It has also been calculated that the carbon footprint of one Ethereum transaction is 33.4 kg of CO2. 

The average NFT-specific transaction has a carbon footprint of around 48 kg of CO2. However, this is also not the final amount, as each time an NFT is minted or traded, it becomes another transaction with additional CO2 emissions.

If such valuations continue to rise, a single NFT transaction is likely to have a carbon footprint more than 14 times greater than mailing an art print valued at 2.3 kg of CO2. Thus, Ethereum consumes more energy than any other way to authenticate and sell original artwork. It is said that its annual energy consumption even exceeds that of Denmark.

Now that its popularity has risen, the increase in NFT users and transactions has exacerbated the problem. In addition, it is possible to secure cryptocurrencies such as Bitcoin and Ethereum through a mechanism called Proof of Work (PoW), an energy-intensive mining process. This automatically implies that these blockchains are power-hungry by design.

5 challenges of NFTs

Lack of legislative regulation

Since the NFT market is still in its infancy, the legal and regulatory framework on this subject is constantly evolving. Although most countries do not yet have laws or regulations specifically addressing non-fungible tokens, a number of certain restrictions apply to this asset class. Intellectual property, privacy, and anti-money laundering (AML) issues are also acute. Experts agree that one of the main problems of the NFT sphere is vague legal concepts and the lack of clear regulation.

Questionable value of non-fungible tokens

The cost of NFTs is highly volatile as it depends on several factors. Initially, it is influenced by the status of the seller, rarity, exclusivity, practical significance, hype, etc. It is very difficult for collectors to determine the real value of an NFT at the time of purchase or to predict the price increase in the long term if a non-fungible token is purchased as an investment. Another problem with NFTs is that their value can rise or fall unpredictably.

Lack of benefit

The vast majority of NFTs are of no use. This is just a picture that belongs to you according to a certificate certified by a smart contract on the blockchain. But is it enough for people to need such NFTs for a long time?


The NFT realm is a scammer’s paradise. Fake NFT works by well-known artists, one-day websites posing as stores and stealing customer payment information, as well as people selling non-fungible tokens that already belong to someone. And this is just the tip of the iceberg. A huge number of fraudulent schemes are associated with NFT. According to experts, this is the main problem in the sphere.

Misunderstanding of NFT technology by users

Another problem in the NFT-sphere is people’s misunderstanding of the essence of the technology itself. Society has not yet really understood what a cryptocurrency is, and not everyone is given to understand the intricacies of certain classes of digital assets. In this regard, someone still thinks that non-fungible tokens are just pictures that are not clear why they cost a lot of money but do not really represent anything. This opinion creates a skeptical attitude towards the industry as a whole.

Proof-of-Stake: Reducing NFTs’ impact on the environment

NFTs can be made greener in several ways.

First, the cryptocurrency industry has sought to use more sustainable energy sources for mining. However, this solution has its own problems, including the constant load on the electrical system and the fact that renewable energy can probably be used for other, more pressing needs, such as providing people with lights on.

Other options include changes to the underlying NFT technology. NFT-related consumption and greenhouse gas emissions can be reduced with blockchain, which uses a more energy-efficient Proof-of-Stake method. By securing a certain amount of cryptocurrencies under a Proof-of-Stake system, miners have the ability to verify the next block in the blockchain. Powerful computers are no longer relevant.

Solana, Algorand, Cardano, and Tezos are blockchains that already support NFT and use the Proof-of-Stake architecture. Ethereum is trying to migrate to Ethereum 2.0, a Proof-of-Stake mechanism. Although it has been in motion for some time now, no switchover date has been set. 

The Ethereum blockchain has been playing with the transition from PoW (Proof-of-work) to PoS for some time, and if such testing ends with a complete model change, this could reduce Ethereum’s energy costs by 99.9%.

Adding a second layer to the blockchain is one way to address the environmental impact of NFTs. Anyone can transact outside the blockchain using the second layer, which then allows them to be batched into one big transaction on the blockchain. There are many “layer 2” solutions for all kinds of blockchains, one of the most notable of which is the Bitcoin Lightning Network.

Some digital artists, for environmental reasons, are moving to smaller trading platforms to sell NFTs, or “sidechains” – small blockchains that run alongside larger ones. 

The solution to the devastating impact of cryptocurrencies on the environment can be as simple as upgrading technology to make it more environmentally friendly and energy efficient or turning NFTs off cryptocurrencies and mining entirely. But nothing has been done yet.

Are NFTs threatening the future of the planet?

Blockchain-based transactions that support NFT do emit some CO2. In an effort to mitigate this impact, many NFT creators and marketplaces are looking for alternatives and are constantly improving the industry. Large blockchain networks are also joining the cause, moving to more energy-efficient models such as PoS.

The potential for real-world applications for NFTs is enormous. It is also clear that any technological innovation will have a corresponding environmental footprint, be it internal combustion engines, artificial intelligence, machine learning, or smartphones. Everything requires production capacity and energy to work. But over time, existing technologies are improving, just like electric cars are phasing out internal combustion engines. Innovation is essential for progress, so finding a balance is important, and blockchain innovation – NFT in particular – is already making headway in this aspect.