Regardless of which side of the NFT craze you’re on, whether you’re an avid enthusiast and collector, or you’re a finance expert that still doesn’t understand the hype behind these collectibles, you’ve likely heard about the big debate.
The debate surrounds energy use and environmental concerns surrounding cryptocurrencies and anything that lives on the blockchain.
On one side of the coin, enthusiasts see NFTs as the best thing since sliced bread, giving owners verifiable ownership of their art. On the other side, those against the industry suggest that the power consumption involved in minting, trading, and storing NFTs is more than the global environment can take.
Where Is the Debate Coming From?
Before we talk about the debate in and of itself, and who might be on the right side of the coin, it’s important that you understand why the debate is happening in the first place, and if you’re into cryptocurrency and Web3, you may already know. Nonetheless, for the newbies, here’s what you need to know:
The traditional blockchain is essentially a chain of countless blocks of data that can be accessed in order to verify the ownership of a digital asset, whether that be Bitcoin, Ethereum, another cryptocurrency, or a non-fungible token (NFT).
The system is essentially an open-source system where servers and mining computers store the data and make entries in the blockchain. However, to do so, at least in the traditional sense, these servers must solve complex equations; equations that take a massive amount of computing power.
Of course, where computing power is needed, energy consumption takes place. Opponents of the cryptocurrency and NFT concepts say that the energy consumption needed to make this process possible is far too high. In fact, in 2017, harvesting and storage of Bitcoin resulted in more energy consumption than the amount of energy needed to power the entire country of Angola. While few comparisons have been made since, it’s easy to come to the conclusion that the energy needed for Bitcoin mining has grown with its popularity, and yes, that’s a bad thing for the environment.
Onto the Debate Surrounding NFTs
NFTs, or non-fungible tokens, work alot like Bitcoin, but with a major difference. Sure, these are tokens that live on the blockchain, but unlike Bitcoin, one can’t be traded for another, resulting in ownership of the same thing. By their very nature, NFTs are non-fungible, meaning that copies can’t be made and each token is unique.
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Another thing to keep in mind is that Bitcoin, the popular cryptocurrency, runs on the Bitcoin blockchain, the chain that requires a massive amount of energy consumption for mining and data storage. NFTs, on the other hand, aren’t only able to live on the Bitcoin blockchain. These tokens can live on any blockchain, with most of them living on Ethereum.
Like the Bitcoin blockchain, mining Ethereum takes quite a bit of energy, leading to the energy consumption debate. Those against the use of so much energy to track digital assets say that energy consumption is growing and the NFT industry must come to a halt in order to help the environment.
On the other hand, proponents of the industry have a multi-fold answer to these concerns:
First and foremost, as mentioned above, NFTs don’t have to live on the Bitcoin, or Ethereum, blockchains. They can be designed to live on any blockchain in existence. This creates more options, and believe it or not, many NFT, and cryptocurrency, enthusiasts are also incredibly environmentally conscious.
As a result, many pioneers in the industry have started to develop ways to make the blockchain work without the need for such high levels of energy consumption. For example, on the cryptocurrency side, Pi Network has been developing a product that’s expected to hit the mainnet soon. However, instead of requiring the consumption of massive amounts of energy, the currency is mined on smartphones through a low-energy application. These smartphones create links within the blockchain that are used for a more environmentally-friendly way of mining cryptocurrency and verifying digital ownership.
On the NFT side of the token, there’s another network that’s gaining significant steam. That’s the Polygon network, one that was designed to reduce both, the cost, and the environmental impact, associated with transactions on the blockchain. In fact, gas fees, or the cost of processing a transaction on Ethereum, have climbed to hundreds of dollars, largely as a result of high levels of energy consumption. On the other hand, on the Polygon network, gas fees are around two tenths of a penny, pointing to a significant reduction in necessary energy consumption to make these transactions possible.
Important – Especially If You’re Against NFTs
The most important thing to consider here, especially if you’re against NFTs as a result of environmental concerns, is that the industry isn’t made up of a bunch of tech junkies that don’t care about the environment.
Sure, there’s a clear argument that the Bitcoin and Ethereum blockchains, along with many others, are horrible for the environment. On the other hand, it’s important to remember that the industry is in its infancy. Think about it from the standpoint of a combustion engine. Muscle cars were created without knowing the horrible impact they’d have on the environment. Over time, innovation led to more environmentally-friendly engines, and now, electric vehicles, and vehicles that run on hydrogen are available.
The NFT and cryptocurrency industry is evolving at a much faster pace than the combustion engine did. Just a few short years after the first digital asset drop, new networks and blockchains are being created to address the energy consumption concerns. I’m expecting this trend to continue and for the debate surrounding the environmental impact of NFT collections to fizzle out.
The Bottom Line
The bottom line here is simple, NFTs and cryptocurrency are very new concepts, and of course, have bugs to work out. However, innovation is happening in the digital realm far faster than it has happened in just about any space that I can think of. This continued innovation will ultimately result in a system that’s good for the environment and meets the needs of enthusiasts in the industry.