As the NFT market continues to grow, a new generation of blockchains is springing up to counter the negative effects of NFTs on the environment.
The expanding NFT market
The blockchain network has witnessed an astronomical rise in recent times. It owes this success to the increasing number of use cases for decentralized technology. What started as a decentralized way of sending money across the world without third-party interference has seen use cases that allow for its applicability in various other aspects.
NFTs are one of the use cases that emerged from blockchain technology. The NFT market has expanded and grown to accommodate alternative industries and purposes, culminating in marketplaces that offer digital items such as memes, avatars, graphics, sports, moments, and pixelated creatures. In fact, the increasing number of NFT use cases is the driving force behind NFTs accounting for 38% of all blockchain transactions since July 2020.
An associated problem with this steady growth of NFTs is the rapid rate at which the carbon footprint of the blockchain and the marketplaces they are hosted on rely on. For instance, most NFTs are primarily traded in marketplaces that rely on Ethereum, which means increased activity in NFTs will increase the blockchain’s carbon footprint. Taking that into context, the Ethereum blockchain has the lion’s share of NFTs, accounting for 80%. Its annual energy consumption is comparable to that of the Netherlands, while its annual average footprint is equivalent to Belarus’s. To put it another way, one individual transaction on Ethereum amounts to the power consumption of a U.S. household for almost nine days.
In an age where the primary focus is on reducing carbon footprint, it is no surprise then that buyers and sellers are actively looking for environmentally friendly blockchains to trade on, with some even shunning NFT drops altogether.
Tackling the environmental concerns of NFTs
How environmentally friendly an NFT depends on the blockchain on which it is built, this determines the NFT’s carbon footprint. The primary cause of NFT’s large carbon footprint is the proof of work that most blockchains rely on to validate transactions and mint new coins to miners.
These growing environmental concerns have caused some to halt their plans to venture into the NFT space. In 2021, architect Chris Precht abandoned plans to sell NFTs due to the environmental impact of mining them.
NFT artist Memo Akten labeled the ecological cost of crypto art “unreasonable.” French artist Joanie Lemercier has since 2021 been raising awareness of the “disastrous” impact of the Ethereum on the environment and the need for more sustainable options.
Some have, however, called the public’s notion of the NFTs being unfriendly a misconception. Believers like Pallant attribute this misconception to the lack of public knowledge of the several other blockchains that are transitioning to being carbon neutral. However, the public’s concern remains valid, considering that 80% of all the transactions occur on the Ethereum network.
The steady rise of green NFTs
A new generation of blockchains is emerging to tackle the carbon footprint of NFTs. Blockchains such as Solana, IMX, WAX, and Avalanche are fast becoming alternatives to trade on due to their proof-of-stake operating mechanism, which is more environmentally than Ethereum’s and Bitcoin’s proof-of-work system.
As the volume of transactions declines on the Ethereum network, the network has also pledged to switch to proof of stake by the end of 2022. The move will reduce its environmental impact by 99%, according to Tim Beiko, the coordinator for Ethereum’s protocol developers.
Pallant also suggested that NFT creators looking to reduce their carbon footprint should choose blockchains with a proof-of-stake mechanism.