Clarifying a big misunderstanding about the ecological impact of NFTs–and what we’re doing to make SuperRare more sustainable
Recently there has been a public debate about the environmental impact of CryptoArt, with some pretty serious allegations being tossed around–mainly that minting and selling NFTs increases the carbon emissions of the Ethereum network. We take these questions seriously and believe it is extremely important to understand the ecological impact of new technologies.
In this post we’ll point out that while well-intentioned, the argument that NFTs cause carbon emissions is untrue, and is based on a misunderstanding of how Ethereum works.
That said, Ethereum itself is energy intensive and as part of our core values we are committed to pursuing more sustainable solutions. Later in the post we share our thinking on the near and long-term implications of using Ethereum and our plans for helping the whole industry transition to a more sustainable technology stack.
First, why use a blockchain for digital art?
Our mission at SuperRare is to reinvent the art market for the digital age. This means directly empowering artists to make money without traditional middlemen like galleries and art dealers, and unlocking entirely new possibilities such as the ability for artists to earn a 10% royalty each time a work changes hands in the future. Ethereum — the blockchain powering the SuperRare marketplace — provides a highly secure peer-to-peer transaction layer that makes these things possible.
While blockchains are still an early-stage technology with a lot of room for improvement, they provide a powerful platform on which to build a fairer and more equitable creator economy on the internet.
How and why blockchains consume energy
It is true that Ethereum is energy intensive. This energy consumption corresponds to the electricity that miners use in order to validate transactions and earn Ether (ETH) as a reward through a mechanism called Proof of Work.
Put simply, miners compete against each other in a computational race in order to earn the most ETH rewards. The main effect of this is to make Ethereum a highly secure computing platform. But it also makes it an energy intensive one (until an upcoming version 2.0).
Minting & trading NFTs does not increase Ethereum’s carbon emissions
It is important to note that Ethereum has a fixed energy consumption at a given point in time. While the network is constantly processing transactions (financial trades, NFT minting etc.) these transactions do not actually increase or affect the energy consumption of the network.
Rather, the total energy spent on mining depends on a relationship between Ethereum price, which is the source revenue for miners, and the cost of energy.
You can think of Ethereum kind of like a train engine throttled to the same speed all day, kept running by miners securing the network in exchange for ETH. In this analogy, transactions submitted to the network would be seats on the train. Due to the design of Ethereum, the train will keep running at the same speed and with the same energy consumption whether or not there are any seats filled.
In other words, if everyone took a break from using Ethereum apps and no transactions were sent for a whole day, the carbon emissions of the network would essentially stay the same.
The University of Cambridge has published scientific studies on the energy consumption of proof-of-work blockchains, and features a “Common Misconceptions” section on its website.
The popular “energy cost per transaction” metric is regularly featured in the media and other academic studies despite having multiple issues.
Transaction throughput (i.e. the number of transactions that the system can process) is independent of the network’s electricity consumption. Adding more mining equipment and thus increasing electricity consumption will have no impact on the number of processed transactions.
–University of Cambridge Electricity Consumption Index [source]
But what about gas? I’ve read that transaction fees paid in gas are equivalent to higher carbon emissions
The term gas in Ethereum refers to a fee that accompanies transactions sent to the network. Although a somewhat confusing name, gas is in no way related to increased energy consumption by the network. It is actually a simple mechanism that prevents spam being sent to the network by imparting a cost for each transaction.
Thus, claims that more computationally-intensive transactions such as minting NFTs cause more energy consumption in the Ethereum network are untrue. Higher gas transactions cost the sender more money, but are not correlated with higher energy consumption.
So why isn’t anyone trying to make Ethereum more efficient?
In fact, lots of people are! The Ethereum community has long been sensitive to the inefficiencies of the current mechanism. For this reason, several teams are working on moving to a cleaner, more efficient mechanism (Proof Of Stake) which will drastically reduce the emissions caused by the network. The ETH2 development teams currently estimate that the Proof Of Stake chain will be usable by early of 2022.
Ok, so NFTs don’t increase Ethereum’s emissions, but can’t we still do something to help?
Even though NFTs don’t directly impact Ethereum’s carbon emissions, applications such as SuperRare still make use of the network and contribute to its adoption. Thus we believe we have a responsibility to help mitigate its effects in both the short and long term.
In the immediate term, we are committed to reducing the impact of Ethereum’s carbon emissions by using carbon offsets.
And to help with a more sustainable and long term solution, we are also donating money to ETH 2.0 research to accelerate the development of a more energy-efficient network.
We are working on an analysis of the structure of these initiatives, and will publish a detailed outline of our plans later this month.
Additionally, we are exploring other scaling solutions in order to have multiple more sustainable options. Some of these are Polygon (FKA Matic), which is developing an ecosystem of scalable and efficient blockchain solutions compatible with Ethereum. If Ethereum doesn’t solve its efficiency issues in the medium term, we are also keeping an eye on Polkadot and similar proof-of-stake blockchains.
How can I get involved and help too?
It’s important for community members to be knowledgeable and engaged in these complex issues as the technology and ecosystem evolves. Carbon.fyi has put together a fantastic resource on the topic, along with handy info on participating in carbon offsets yourself if you’re interested.