Without delving too deeply into the inner workings of blockchain, at its core it’s essentially a database system that allows for secure transactions on the Internet. What powers this technology is a very long, complex and public ledger of transactions. A wide network of computers is constantly at work, checking to make sure the chain stays the same and that the only additions are authorized new blocks of data.
Cryptocurrencies, such as Bitcoin, use blockchain to keep track of who owns coins and who can buy and sell them. Spending a bitcoin requires confirming the whole chain, which is relatively straightforward for a computer. Creating, or “mining,” a bitcoin out of thin air requires many advanced computers working fiendishly hard to quickly solve unimaginably hard math problems. It’s difficult and energy-intensive — on purpose.
NFTs are minted on the Ethereum blockchain, the second most popular cryptocurrency after Bitcoin. One analysis found the energy footprint of the average transaction on this network is roughly 35 kilowatt hours (kWh) — about the same as powering a refrigerator for a month. But NFT transactions also involve minting, bidding, selling and transferring a digital token. All these actions are costly, adding up to an average of 369 kWh — more than 10 times as much energy. One researcher calculated that a certain artist selling two pieces of artwork used more than 175 megawatt hours (MWh), creating the greenhouse gas emissions of 21 years of a U.S. household’s electricity (calculated based on EPA GHG equivalency of energy use; 176,773 mWh figure via Joanie Lemercier on Twitter.)
The energy cost of an NFT depends on the number of transactions rather than its selling price. An NFT sold for $1 million has a considerably lower impact than 100 NFTs that sell for $15 each. But as more artists join growing marketplaces, the low-cost, high-volume strategy is gaining popularity, which could lead to devastating environmental consequences. The danger is that NFTs become the key to a new market of digital collectables, thereby resulting in an inexcusable amount of wasted energy.