Greater demand and more NFT transactions indicate profit-making opportunities for the miners which could then lead to increased emissions. It is claimed, the digital token already uses about as much electricity as the entire country of Libya. Platforms that sell NFTs typically need buyers to use Ethereum to make their purchases. While future cryptocurrencies are already taking a more environmental approach, and Ethereum is working towards a similar route, both Bitcoin and Ethereum mining are currently at their highest environmental impacts to date.NFTs are Ethereum-based tokens that are part of the Ethereum blockchain. These alternative currencies (known as altcoins) started off on proof of stake systems, which allowed them to skip the environmentally damaging position both Ethereum and Bitcoin currently find themselves in. So perhaps we’re moving in the right direction.” says Howsen. CryptoKitties, one of the first ever NFT collections, no longer uses Ethereum. These can enable NFT markets without the carbon headache because they use negligible amounts of energy on a more centralised platform. “Alternative’s to Ethereum already exist. While Ethereum makes the move, there are other cryptocurrencies that are already ahead of the game on this. This could mean NFTs could be produced and transferred with very little impact on the environment. It’s hard to move from a legacy system to something completely new, especially when it is something as big and popular as Ethereum,” Says Merav Ozair, a leading blockchain and financial tech expert.īut once Ethereum does manage to make the move, it will result in a drastic reduction in the energy consumption used. “This move from proof of work to proof of stake has been in the process for years. However, while this sounds like an easy change to make, it does take time. Graph showing energy consumption for cryptocurrency © Ethereum In essence, this simply means instead of computers guessing long strings of digits, human validators are used and they stake Ethereum as collateral to stop them becoming lazy and make sure they are authenticating correctly. Looking to the future and how they can fix this, Ethereum is looking to move from a proof of work system to proof of stake. The company behind Ethereum has been very open about this issue, even stating themselves that the current energy expenditure is too high and unsustainable. While these are some extreme numbers, it doesn’t mean that Ethereum is doomed to remain an energy consumption powerhouse. That single transaction would require the same amount of energy as your average UK household uses in two weeks.”
“If you watched 20,000 hours of YouTube, you would generate less CO2 than if you bought or sold an NFT once. The blockchain has a carbon footprint larger than Singapore’s, around 50-60 million tonnes of CO2 per year, nearly twice as polluting as Europe’s biggest coal fired power plant (Belcatow, Poland)," Says Howsen. “Ethereum uses more energy than the Netherlands. Because cryptocurrencies aren’t on a central network, computers are needed to confirm a transaction is legitimate.
This process is essentially playing the role of banks. “They guess the combination to a long string of digits, with the most powerful crypto-bingo player winning a few thousand pounds worth of cryptocurrency, as well as the fees people pay to make NFTs and store transaction records.” These millions of mining computers all around the world essentially play a game of guess-the-number,” explains Dr Pete Howsen, a senior lecturer at Northumbria University. “The Ethereum blockchain uses a global network of computers that compete to process your data for a fee. In the current format known as proof of work, this requires computers devoting a lot of power.
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