Eco-friendly NFTs: Can NFTs Be Used To Reverse Climate Change?
NFTs or non-fungible tokens are generally thought of as environmentally unfriendly. But is that really true and are there eco-friendly NFTs?
SustainFi Updated April 28th, 2022
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What are NFTs?
Non-fungible tokens or NFTs are unique digital assets, such as artworks hosted on the blockchain like Ethereum. The best-known NFTs, such as Bored Ape Yacht Club or CryptoPunks, are digital works of art that appeal to collectors who buy them for bragging rights or resale potential.
However, NFTs can also appeal to people who want to be part of a community and get perks, support a project or donate to a favorite cause.
According to one report, the NFT market hit $17.6 billion in 2021, up from just $82.5 million in 2020. The artist Beeple famously sold one digital work for $69 million. Although the market is showing signs of cooling in 2022, it is still a force to be reckoned with.
The environmental impact of NFTs: do NFTs contribute to climate change?
NFTs have been criticized for contributing to climate change, and the criticism is not unmerited. Most NFTs today use the Ethereum blockchain, which, like Bitcoin, is built on a system called “proof-of-work.”
Minting new tokens requires a lot of computers to solve complicated puzzles, and that demands a lot of energy. We don’t know for sure what percentage of that energy comes from renewables versus fossil fuels.
Many crypto miners and organizations, especially in Europe and the United States, acknowledge the issue. The Crypto Climate Accord encourages everyone to transition to clean power by 2030 and get to net-zero carbon emissions by 2040. However, even if crypto is mined with clean power, that means less renewables going to other uses, such as heating homes.
Several estimates project how much energy and greenhouse gas emissions minting an NFT requires. According to computer scientist Memo Akten, the environmental footprint of a single NFT is around 340 KWh and 211 kilograms of CO2. The calculation involves minting the NFT, the bidding process on a marketplace like OpenSea, sale, and transfer of ownership.
To give you a better idea, the footprint of a single NFT is equal to a European Union resident’s total electric power consumption for one month. It is also the same as flying for two hours or driving for over 600 miles.
It is scary to imagine the carbon footprint of popular NFT collections like the Bored Ape Yacht Club.
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Can NFTs be greener?
However, NFTs don’t have to be that bad for the environment. There are several ways of reducing the carbon footprint of NFTs.
NFTs hosted on Solana
Ethereum is the most popular NFT blockchain based on trading volume, but there are alternatives.
In comparison, Solana is an eco-friendly blockchain that relies on the “proof-of-history” mechanism, using 99%+ less energy than Ethereum’s “proof-of-stake.” Minting a single NFT on the Solana blockchain uses up the energy equivalent of ten Google searches, which is not a lot. Although Solana still requires power, in late 2021, the Solana Foundation announced that it had become carbon-neutral thanks to carbon offsets.
Although Solana’s market capitalization and the number of exchanges working with it are lower than Ethereum’s, the blockchain is growing.
Carbon offsets, often generated by planting more trees or preserving forests that absorb carbon, are not the solution to climate change. But they can help to some degree, even though minting NFTs on power-hungry Ethereum and then buying offsets is not ideal.
Carbon offsets can be turned into tokens recorded on a blockchain. KlimaDAO is a decentralized organization that traces and logs verified carbon offsets, with each offset deposited in the Klima “treasury.” Each Klima token is backed by a ton of carbon offsets sourced from third-party organizations. Klima itself relies on the Polygon protocol, which makes Ethereum more energy-efficient.
A service called Nori can also reduce an NFT’s environmental impact by letting NFT developers buy carbon offsets to compensate for minting, selling, and transferring NFTs.
Ethereum’s energy transition
Ethereum plans to go greener by transitioning to a more energy-efficient “proof-of-stake” mechanism. Proof-of-stake doesn’t require solving complex puzzles, reducing the need for power-hungry supercomputers. The transition is expected to happen in 2022.
Ethereum’s transition to proof-of-stake will reduce its impact on the environment by a whopping 99%. This can be a game-changer for crypto enthusiasts who also care about the environment.
Ethereum’s energy efficiency can also be improved by protocols like Polygon, which sit on top of Ethereum, upgrading it and making it more efficient. But improving Ethereum’s efficiency is not enough to make Ethereum green.
Lazy minting and NFT bridging
Other ways of making NFTs more sustainable include lazy minting, i.e., not minting the NFT unless there is a buyer, and NFT bridging, which makes the NFT transferrable between blockchains. But these are really stop-gap measures rather than comprehensive solutions to the problem.
Can NFTs be used to reverse climate change?
NFTs are not all bad. NFTs can benefit many causes, such as raising awareness about important issues among Gen Z and millennial crypto enthusiasts and helping donate to various causes.
For example, the Burly Bears project by digital artist Diablo promoted over 6,000 bears from six endangered species. A substantial portion of the proceeds will go to charities saving these bears, such as the Gobi Bear Project. Donations are public, with proceeds distributed to a public charity wallet. Selected NFT holders will be able to visit the bears in their natural habitats.
5 sustainable NFT projects
Several environmental projects have successfully used NFTs to raise money. For example, the Open Earth Foundation’s OceanDrop collection raised $130,000 through 23 NFTs. The funds will support the foundation’s marine life conservation initiative. The drop’s carbon footprint was canceled out using carbon offsets logged with KlimaDAO.
TrashPiles is another NFT project supporting ocean clean-up. TrashPiles aims to donate $100,000 to ocean clean-up efforts, removing 100,000 lbs. of waste from beaches. Claiming to be the most environmentally friendly NFT project on the market, TrashPiles relies on the Solana blockchain.
World of Waves
World of Waves is releasing a charity-based NFT platform, supporting non-profits by helping them raise money. Funds raised through the platform must go to charity and nothing else.
Moss Amazon NFTs
Moss.Earth is a carbon offset startup that wants to help businesses and individuals offset their emissions. They support several environmental projects which generate offsets, including deforestation prevention, reforestation, and carbon sequestration. These projects are located in the Brazilian Amazon.
Besides selling offsets, Moss.Earth has launched the MCO2 token, which is traded on major crypto exchanges like Coinbase, Gemini, and Uniswap. Each token is linked to one ton of CO2. Moss. Earth has also launched an NFT, the Moss Amazon NFT.
Moss Amazon NFTs give buyers ownership of one hectare of the Amazon rainforest. Holders can monitor their piece digitally, using remote sensing tech from Descartes Labs. The NFT carries rights related to the actual forest, with Moss.Earth acting as the custodian. As part of the project, Moss has created a 30-year fund to protect the rainforest. 20% of the proceeds will go to patrolling, satellite imagery, and maintenance.
Moss Amazon NFTs are available through OpenSea, Rarum (a carbon-free NFT platform), or NFTFY. According to the company, the first drop sold out within one hour of launch.
Greenverse is a green metaverse project that seeks to stop climate change. The project is building a tokenized model of natural assets, linking their preservation to tokens. The goal is to create a digital register of natural resources, starting with a physical, undeveloped oilfield in Jameson Land, Greenland. Token holders are encouraged to keep the resources underground and undeveloped through the preserve-to-earn model.
🔔 Wondering how green your crypto is? Check out the list of the most environmentally-friendly cryptos.