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Reasons why they are bad for the environment

Reasons why they are bad for the environment

By now, you’ve probably heard (or even joined in) the conversation about crypto and its effects on the environment. Climate activists have been talking about the evils of cryptocurrency for years, and the crypto brethren have also fought back with their own arguments.

The conversation has grown bigger than ever with the popularization of NFTs. Search NFTs and the climate and you’ll find countless articles on the subject.

While most view NFTs as an unnecessary evil due to their effects on the climate, through research we have found that there are solutions currently being developed to mitigate the impact.

Before we fully dive into this conversation, we must first understand how and why NFTs are considered bad for the climate in the first place.

First, a bit about NFTs

If you still don’t understand what NFTs are, here is a quick overview.

NFT stands for non-fungible token. Fungibility is the ownership of a good or commodity that can be exchanged with other individual goods or commodities of the same type. Thus, fiat currency and even cryptocurrency are fungible. However, NFTs are not.

NFT ownership is recorded on blockchains, which are systems that record transactions made in cryptocurrency. Blockchains are maintained on multiple computers, linked in a peer-to-peer network.

If this sounds like gibberish to you (which it did to me at first), the main point is that blockchains operate in a way that makes information difficult or impossible to alter or hack. It is a transparent but secure system of record keeping and distribution.

Now that you know what NFTs are, here’s why the environmental friendliness of NFTs has been hotly debated in recent years.

1. Minting, Selling, and Transferring NFTs All Require Energy

First, let’s understand the life cycle of an NFT. For an NFT to exist, it must be minted, just like fiat coins. In crypto, minting refers to the process of generating a new coin by authenticating data, creating new blocks, and recording information on the blockchain. This process, unsurprisingly, requires energy.

It doesn’t stop there. Every NFT transaction, including auctions, sales, and transfers of NFTs, requires electricity. If you decide to “delete” an NFT (i.e. burn it by sending it to a null, unreachable address), that also takes power.

Different transactions have different levels of complexity, which means that some consume more energy than others.

At this point, you might be wondering exactly how much energy each NFT transaction takes.

Many people have quoted Article by Memo Akten on Mediumwhich was last updated in December 2021. It’s a pretty long article that will make the average person’s eyes blurry, so here are some key numbers it refers to.

Data from Kyle McDonald’s analysis of Ethereum emissions / Image credit: Kyle McDonald

Akten studied super rare, one of many NFT markets, to do its calculations. According to his analysis, the average footprint per average NFT-related transaction is 82 KWh or 46 KgCO2.

Akten also added some additional information obtained from the artist Kyle McDonald’s studywhich included these statistics regarding NFTs:

  • 100 KgCO2 mint (apparently comparable to a one or two hour flight);
  • 200+ KgCO2 for a sale with low bids (comparable to a three-hour flight);
  • 500+ KgCO2 for more offers and more sales (comparable to a flight of more than five hours).

Then, according to the Cambridge Center for Alternative Finance (CCAF), Bitcoin consumes around 110 TWh per year, which supposedly equals Malaysia’s annual energy consumption.

Information from CCAF / Image credit: CCAF

Another platform, Digiconomist, is also often cited. According to this platform, the electrical energy used by the Ethereum blockchain is 92.69 TWh, comparable to the annualized electricity consumption of our neighboring country, the Philippines.

The site also reports that Ethereum’s annual carbon footprint is 51.7 Mt CO2, comparable to Sweden’s carbon footprint.

But there is a lot of debate around these figures, because they are ultimately only estimates.

2. Ethereum and Bitcoin proof-of-work models are power-hungry

You will notice that we mentioned Ethereum and Bitcoin specifically, because they are two of the biggest names in blockchain technology.

Both Ethereum and Bitcoin currently use proof-of-work protocols, which refer to decentralized consensus mechanisms that essentially validate transactions.

Estimates made by Digiconomist / Image credit: Digiconomist

Proof of work is done by minors, which compete to create new blocks filled with processed transactions. The winner shares the new block with the rest of the network and earns freshly created ETH. The race is won by the computer that is able to solve a mathematical puzzle the fastest – this produces the cryptographic link between the current block and the previous block. Solving this puzzle is the “proof of work” work.


Proof of work is known to be power-intensive, pretty much by design, because power secures the network.

However, even Ethereum itself has stated that its current energy expenditure with the proof-of-work model is too high and therefore unsustainable. Therefore, he plans to move to the proof-of-stake protocol instead. This removes the “puzzle solving” needed in the proof of work model.

In proof of stake, cryptocurrency owners can stake their coins, which gives them the right to verify new transaction blocks and add them to the blockchain. In this system:

Miners are replaced by validators who perform the same function, except instead of spending their assets upfront in the form of computational work, they stake ETH as collateral against dishonest behavior. If the validator is lazy (offline when they are supposed to perform certain validator functions), their staked ETH may slowly leak out, while obviously dishonest behavior results in staked assets being “shrinked”.


Some blockchains using proof-of-stake currently include Solana, Tezosand Algorand, among other names. Locally, we also have Zetrixwhich is what NFT Pangolin works on.

3. The energy source used may be unsustainable

It’s one thing to use a lot of energy, but it’s another if the energy used is non-renewable and therefore unsustainable.

According to Cambridge Bitcoin Electricity Consumption Index, bitcoin miners in particular have been found to primarily use hydroelectric power, coal, and natural gas as power sources. However, there were also those using petroleum, nuclear power, and renewables such as wind, solar, and geothermal power.

According to Ethereum, “much of mining uses renewable energy sources or untapped energy in remote locations.” However, Ethereum claims that many industries that NFTs and crypto are disrupting also have huge carbon footprints, such as the financial sector.

Of course, two “wrongs” don’t make a right, and the impact of the financial sector on climate change must also continue to be improved.

4. The addition of electronic waste

E-waste is an issue that goes beyond NFTs, but cryptography certainly plays a part in it, especially when it comes to Bitcoin mining, which requires special application-specific ICs. Ethereum mining is done with graphics processing units (GPUs) found in every home computer.

Mining “rigs” will eventually break down, resulting in a lot of e-waste. According a UN report in 2019the world produces up to 50 million tons of e-waste and only less than 20% of e-waste is formally recycled.

The problem with e-waste is that when exposed to heat, it releases toxic chemicals into the atmosphere. This not only affects our climate, but also our health.

So… NFTs are killing the earth?

Overall, the biggest contributor to climate change is the burning of fossil fuels. For now, cryptocurrency is only a fragment of other factors that harm our environment.

Of course, this does not justify the impact of crypto on the climate. But when the internet started being a thing back then, there was also a lot of debate about its environmental footprint.

This CNBC Article interviewed Jonathan Koomey, a Stanford University lecturer who helped debunk widely publicized projections of internet energy use in the 1990s. At the time, studies exaggerated the internet’s share of electricity consumption in the United States and predicted that it would double in 10 years.

And look at us now, gobbling up memes on Twitter and DMing Instagram without a care in the world.

Yet the fact is that NFTs still carry a legacy of high electricity consumption and a positive carbon footprint. We know that.

But this HBR newspaper posed an arguably better, contextualized and nuanced question: How much energy is an industry worth consuming?

Everyone knows that cars leave a carbon footprint, but many of us have collectively decided it’s some kind of necessary evil. It is a voluntary sacrifice that we make for the sake of efficiency.

Some people think crypto is dumb. And for others, it’s their livelihood. And maybe, like the internet, crypto could inevitably be the future.

In any case, I am personally happy to see platforms like Ethereum at least transparent about their carbon footprint. As written on his website“We are not here to defend the environmental footprint of mining, rather we want to explain how things are changing for the better.”

  • Read other articles we’ve written about NFTs here.


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