The metaverse is Unbanked Newsletter For a weekly level up on the NFT and on-chain frontier
Dear unbanked nations,
NFTs have an image problem in the mainstream.
One reason? Many people believe that NFTs are bad for the environment.
The reality is that most NFT activity today takes place on top of Proof-of-Stake (PoS) blockchains like Ethereum, Polygon, and Solana, which use very little energy.
In today’s post, we’ll look at some energy estimates here and use them as a springboard to discuss the bigger picture.
-WMP
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One of the biggest misconceptions about NFTs is that they need Excessive amount of energy.
This comes during the NFT bull market of 2021, when Ethereum was still undergoing proof-of-work (PoW) mining. PoW was Used to bootstrap the physics of Ethereum and mining operations. is Although energy-intensive, Ethereum’s plan was to move to PoS, dephysicalizing Ethereum by ditching physical miners in favor of digital validators.
The plan was implemented in September 2022 through: absorption The update officially converted Ethereum to PoS. The energy savings were immediate and significant.
In fact, according to one person 2022 report The Crypto Carbon Ratings Institute (CCRI)’s The Merge reduced Ethereum’s annual energy consumption by +99.9% and annual carbon emissions by +99.9%, making the network a decidedly green blockchain.
Additionally, the latest October 2023 report CCRI examined the energy statistics of seven PoS chains: Ethereum, Solana, Cosmos, Avalanche, Algorand, Cardano, and Polkadot.
Among these projects, the least consuming network was Polkadot, which matched the average annual energy consumption of 15 US households, while the most consuming network was Ethereum, which equaled the usage of 542 US households.
According to CCRI’s 2023 report, the carbon footprints of these networks range from Polkadot’s 70.8 tons of annual carbon dioxide (CO2) emissions to Ethereum’s 2,088.4 tons.
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If so, these seven PoS chains recorded approximately 4,935 tons of CO2 emissions in 2023. To give you an idea of the scale, here is a recent A report on the world through data It is estimated that the world will emit more than 34 billion tons of CO2 in 2022. This means that PoS chains, currently the most popular in the cryptocurrency space, account for approximately 0.000014% of global emissions!
That said, one of the most popular use cases for blockchain right now is NFTs, and most NFT activity today occurs on PoS chains. The reality is that the energy footprint of the modern NFT ecosystem is minuscule, dwarfed by emissions from things like the mainstream gaming industry or global data center operations.
Of course, the emergence of Layer 2 (L2) scaling solutions on top of chains like Ethereum, combined with these underlying PoS networks, means the cryptocurrency economy is well positioned to accommodate increasing amounts of energy-efficient financial activities (DeFi) and cultural activities. This means that (NFT) is going to be in progress.
This is why the mainstream saying “NFTs are killing the environment” is so absurd, and the opposite is also true. PoS infrastructure + NFT green An alternative to physical collectibles, physical goods, and more. is Eco-friendly alternative!
Imagine every big touring band and every big sports team in the world replacing 10% of their physical product offerings with digital goods through NFTs. exorbitant Annual CO2 emissions are reduced due to savings in manufacturing and transportation operations. It’s just the truth, whether the naysayers want to accept it or not.
Optimism L2 comes to mind here. Our ❤️ Art Contest, just processed +7,000 NFT submissions. It eliminated the need for 1,000 artists from around the world to ship physical canvas pieces, a process that created a huge carbon footprint. This ultimately happened with a digital mint on top of Ethereum, a network with the same annual energy consumption as a small town with a population of 1,000 to 1,500 people.
Not everything is physical Should be or Should be Although they have gone digital with NFTs, PoS NFTs offer, among other benefits, a green and environmentally friendly way to participate in shaping 21st century culture, and that is something to be celebrated.
However, it has experienced a resurgence since the advent of Bitcoin NFTs. Ordinal Tokenization Method Last year and this NFT is It is based on PoW mining. Although Ordinals are technically powerful and offer an excellent cost-to-permanence ratio, due to the extensive physical nature of Bitcoin mining operations, their energy usage is undoubtedly several times higher than PoS NFTs.
I suspect and personally hope that Bitcoin will eventually switch to PoS. In the meantime, Bitcoin may give NFT critics ammunition, but that shouldn’t stop us from touting the extreme energy efficiency of PoS NFTs and fighting against sweeping mischaracterizations. every NFTs are energy intensive!
William M. Feaster is the creator of metaverse—A bankless newsletter focused on the emergence of NFTs in the cryptoeconomy. He also serves as a senior writer for the Bankless newsletter.
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It is not financial or tax advice. This newsletter is strictly educational and does not constitute investment advice, a solicitation to buy or sell any asset, or a solicitation to make any financial decisions. This newsletter does not constitute tax advice. Consult your accountant. Do your own research.
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