NFT, blockchain and Cryptocurrencies have had an impact on the environment and the industry has been coming under heavy criticism for it’s energy usage. Countries such as Kosovo have issued an outright Crypto mining ban while Iceland is now rejecting any further Crypto or Bitcoin mining companies setting up shop in the country.
The reasons are many and varied for these respective countries’ decisions but one thing it’s impossible to refute is that Crypto DOES have an environmental impact. It’s an issue that the industry is aware of and working hard to change. The current system is becoming untenable; by reducing the environmental impact the industry can begin proving the critics wrong.
NFT has been widely lambasted for the carbon footprint that is created. There is an argument that physical art also leaves a carbon footprint too with things like production, lighting for galleries, security or shipping costs. It’s much harder to calculate as accurately though and ultimately isn’t a strong argument for NFT being ecologically sound.
The Ethereum community have acknowledged that power consumption is a concern and needs to be tackled. Although Ethereum has announced it’s move from PoW (Proof of Work) to PoS (Proof of Stake) no date has been announced at the time of writing and it’s been in discussion since 2017. PoW requires a lot of computational heavy lifting. It’s estimated that the Ethereum network used somewhere between the power consumption of The Philippines and Kazakhstan in 2021. Huge volumes of Crypto users have been flocking to the network taking advantage of DeFi or NFT in art and gaming. The use has more than doubled in 2 short years. This spike in energy consumption is what is drawing countries’ criticism. Even Russia has cited it as a concern as it now looks to regulate Crypto.
Finding alternate ways to make Crypto more environmentally friendly is key to it’s long term sustainability. More than ever, companies are all too aware of the impact their business has on the environment and this is where the PoS model begins to shine.
Polygon is a different network from Ethereum, a Proof of Stake. It promises to cut carbon emissions by 99.95%. That’s a bold claim and one that requires a bit of explanation. Polygon uses validators to verify transactions instead of miners, pledging tokens as collateral. Hence — Proof of Stake rather than the algorithm solving PoW.
In a recent interview with Sandeep Nailwal, co-founder of Polygon he said “If Web 3.0 is to live up to its promise of actually making this world a better place, being green should be an imperative and not an afterthought. At Polygon, it is at the core of our mission,” stated Sandeep. “This is so much more important than winning a dinner-table argument about NFTs with that one crypto-sceptic in the family we all have.” He makes a great point; this is incredibly important for the whole industry.
The arguments against NFT and Crypto often come with loud detractors. Members of the public, business leaders and senior government ministers alike are concerned about the impact Blockchain has on economies and environment. The industry is looking at answering those questions transparently. Acknowledging where there is a need for change and providing a solution.
Bubblehouse has become the first ever carbon neutral NFT marketplace. They realised that above all else, ethics matter. It saw the issues that many had around NFT and wanted to be at the forefront of fixing one of the major stumbling blocks for artists wanting to get into the scene. “The environmental impact is a big part of why many artists have been so hesitant to get into NFTs,” said Rohan Sinha, CEO and co-founder of Bubblehouse. “That’s the first thing we talk about with creators, because it’s important to us too. Now that they know there is a solution, there is a lot of excitement.”
When Ethereum does eventually transition to a PoS model from a PoW, it’s estimated that it will cut the networks energy usage by a factor of 1000. Vitalik Buterin, Ethereum’s creator, believes this will make it “a big problem to basically not a problem at all”. It won’t be happening overnight but the wheels are in motion.
Exactly as other industries have done, Crypto is recognising it’s environmental impact. Companies are listening to consumers and coming up with workable solutions to tackle those concerns. It’s wrong to think of Blockchain as a fledgling or ‘new’ business sector any more. Like other high energy consumption businesses, working on ways to reduce the carbon footprint is vital. PoS could be that game changing moment for the masses where NFT goes from being a misunderstood curio to a part of everyday life.