Over the past year, it’s been hard to avoid discourse surrounding a new phenomenon: NFTs, short for “non-fungible tokens.” Seemingly coming out of nowhere and exploding into the mainstream, many celebrities have endorsed NFTs, including the likes of Eminem, Paris Hilton and even Melania Trump. There’s also a strange NFT-centered television show streaming on Apple TV, called “The Red Ape Family.” It’s clear that there is a massive industry backing the sale of these digital tokens. Worryingly, there are a growing number of reports illustrating the devastating environmental impact that NFTs and cryptocurrencies have on the environment.
Most people have a hard time understanding what an NFT is, or why it would have any value — this is hotly contested. NFTs are essentially one-of-a-kind digital “proofs of purchase” that can be associated with any number of online media. They are backed through cryptocurrencies like Bitcoins, and more commonly the Etherium variant. This process is inherently energy intensive because every time an NFT is created or transferred, a signal is sent to thousands of computers on an online network known as “the blockchain” to verify that said NFT is one-of-a-kind. According to an analysis of the NFT market, simply creating an NFT creates an equivalent carbon footprint to driving 500 miles in an average gas-powered American automobile. Additionally, once transactions are factored in, the average NFT equates to around 620 miles. This is equivalent to the average EU resident’s energy consumption over the course of a month, or using a laptop continuously for 3 years.
According to a paper published in the scientific journal, Nature, researchers concluded that Bitcoin mining in China could begin to offset efforts aimed at combating climate change. According to the study, without any policy interventions, Bitcoin mining in the country “would exceed the total annualized greenhouse gas emission output of the Czech Republic and Qatar.” Since the time of paper publication, China has taken a harsher stance on cryptocurrencies.
It’s clear that NFTs, and the cryptocurrencies associated with them, pose a very real threat to our climate. They serve no necessary utility, and as such, the U.S. government needs to take some sort of action. Cryptocurrencies are already banned in several countries. Russia is also on track to ban the use and mining of cryptocurrencies. If the United States does not take similar measures, it would seriously undermine any other measures to reduce emissions.