NFTs and Environment: All That You Need to Know

As awareness of climate change and ecological damage increases, industry experts and artists are questioning the environmental footprint of nonfungible tokens (NFTs). While the rapid rise of NFTs has captivated the digital world, reliable data on their environmental impact remains scarce. Some figures have emerged, but none have been thoroughly reviewed by independent experts, leaving the true extent of NFT-related emissions uncertain.

What Makes NFTs Unique?

NFTs are blockchain-based assets that ensure digital creations—such as images, videos, and music—are unique and verifiable. Unlike traditional digital files that can be copied endlessly, blockchain technology secures ownership and authenticity through smart contracts. This innovation has fueled NFTs’ popularity, particularly in the art world, but has also raised concerns about their environmental toll.

Are NFTs Harmful to the Environment?

Beeple, the digital artist behind Everydays: The First 5000 Days, which sold for $69 million at Christie’s, acknowledges the environmental concerns surrounding NFTs. He has pledged to make his work carbon-neutral by funding renewable energy projects, conservation efforts, and technology that reduces carbon emissions. Tools like Offsetra help artists calculate their NFT-related emissions, and Beeple has committed to offsetting his footprint by contributing to sustainability initiatives. Along with other leading artists, he has also supported Open Earth Foundation, a nonprofit focused on climate accountability through blockchain innovation.

Understanding the Carbon Footprint of NFTs

Estimating the precise ecological cost of NFTs is challenging, but studies offer insights. A single-edition NFT on Ethereum can generate emissions equivalent to a one-hour flight, while an average NFT’s footprint can exceed a month’s worth of electricity use for a typical EU resident. The broader impact of blockchain technology on the environment is reminiscent of the Industrial Revolution, where technological advancements coincided with rising ecological damage.

Data centers, which power everything from emails to online transactions, account for 1% of global energy demand. The surge in internet use during the pandemic alone added an estimated 3.2 million metric tons of CO2 emissions. For context, one metric ton of CO2 is comparable to driving from San Francisco to Atlanta.

The Energy Consumption of Ethereum

Cryptocurrency mining further amplifies these environmental concerns. Bitcoin, the most energy-intensive blockchain, consumes less than half the power used by the global banking sector, yet its carbon footprint is substantial. Ethereum, which hosts the majority of NFTs, consumes roughly 44.94 terawatt-hours of electricity annually—comparable to the power use of Qatar or Hungary. It also emits approximately 21.35 million metric tons of CO2, similar to the carbon footprint of Sudan.

Each Ethereum transaction requires “gas” fees, which vary based on transaction size and complexity. Since NFTs involve multiple steps—minting, bidding, trading, and transferring ownership—they are significantly more energy-intensive than a standard cryptocurrency transfer. However, debates continue over whether NFTs substantially increase Ethereum’s emissions or merely add to an already existing energy demand.

Proof-of-Work vs. Proof-of-Stake: A Sustainable Alternative?

Ethereum currently operates on a proof-of-work (PoW) consensus mechanism, which is highly energy-intensive. More sustainable alternatives, such as proof-of-stake (PoS) blockchains, consume 99% less energy. Platforms like Algorand, Tezos, Polkadot, and Hedera Hashgraph have embraced PoS, but they remain less popular among artists due to concerns about security, long-term viability, and lower trading volumes.

Ethereum has long planned a transition to PoS via Ethereum 2.0, which would drastically reduce its energy consumption. However, delays in implementation have led to skepticism about when—or if—this shift will happen.

Reducing the Environmental Impact of NFTs

One promising solution is layer-two scaling, which operates on top of the base blockchain and processes transactions off-chain before finalizing them on the main network. Bitcoin’s Lightning Network follows this model, reducing transaction load and energy consumption. Applying a similar approach to NFTs could significantly cut their carbon footprint.

While concerns about NFTs’ environmental impact are valid, the industry is evolving. Innovations in blockchain technology, shifts to PoS, and growing awareness among artists and collectors could pave the way for a more sustainable future.