Why I’m Opting Out of the NFT Gold Rush
This opinion piece was originally written for Music Hackspace.
As a generative artist and musician, I’ve been seeing three letters pop up in my social media feeds with an increasing regularity over the last year. Those three letters are “N”, “F” and “T”. An NFT - which stands for “non-fungible token” - is a way of establishing and verifying the ownership of something - including music, art, and all kinds of other bits and bobs - using blockchain technology.
I’ve always been interested in new technologies, and it’s unusual to see such a vibrant community springing up around something so quickly, so I was initially intrigued. I’ve been following the blockchain and cryptocurrency movement (which includes Bitcoin, Ethereum and Dogecoin) from a distance for about a decade, since writing about Bitcoin for Wired magazine in 2011.
But the problem I’ve always had with blockchains, and the reason why I’ve never personally invested in any, is the vast environmental damage they cause. In a nutshell, that’s also why I refuse to get involved with NFTs - I’m simply not willing to value my art over a liveable planet.
Why do NFTs cause so much environmental damage? Well, NFTs live on blockchains, and at the time of writing, all the major blockchains use a technique called “proof of work”, where your computer solves a bunch of fiendishly complex equations to validate transactions elsewhere on the network. In return, you get rewarded with cryptocurrency. This process is called “mining”.
The problem is that solving a bunch of complex equations requires a lot of computing power, which in turn requires electricity. While renewable energy is becoming more common, the world energy mix is still dominated by fossil fuels - particularly in the countries where most mining takes place. This means that blockchains have an enormous carbon footprint - at the time of writing, Bitcoin’s is about 90 million tonnes, while Ethereum’s is about 41 million tonnes. These two blockchains alone emit almost as much carbon each year as the entire country of The Philippines. If they were a country, they’d be the world’s 36th largest emitter.
This environmental damage is so great that regulators are getting concerned. Recently, the Swedish ministries of financial and environmental regulation teamed up to issue a joint statement that proposes an EU-wide ban on mining proof-of-work cryptocurrencies. They write:
If we were to allow extensive mining of crypto-assets in Sweden, there is a risk that the renewable energy available to us will be insufficient to cover the required climate transition that we need to make. This energy is urgently required for the development of fossil-free steel, large-scale battery manufacturing and the electrification of our transport sector.
There are several approaches that people are taking to try to reduce the astonishing environmental damage caused by NFTs. The first is carbon offsetting - this is the idea that you can cancel out your own emissions by paying other people to lower theirs. Unfortunately, they don’t really work - more than half of carbon offsets fail to offset carbon. And even if they did work, is it really ethical to pay someone in a developing country to plant trees on their farmland and totally change their way of life just so that you can drop a new NFT?
The other approach is shifting from “proof-of-work” blockchains to other consensus mechanisms like “proof-of-stake”, which reduces energy consumption, and therefore emissions. The most notable of these is currently Tezos, which is linked to the marketplace Hic et Nunc. Some people call these “green NFTs” (though they’re not actually greening anything - they’re just less brown), and they’re slowly growing in popularity, though they currently represent a tiny proportion - less than 0.5% - of the total crypto market.
Proof-of-stake, by the way, also doesn’t solve any of the other major red flags when it comes to NFTs - that they're dumb, that they're a scam, that they’re untrustworthy, that they’re a pyramid scheme, or that they perpetuate inequality - all of which are beyond the scope of this blog post.
For me - someone who merely wants our planet to remain habitable - the decision is quite easy. Any money I could make from NFTs pales in comparison with the guilt I’d feel for participating in a system that’s so obscenely wasteful at a time when the Earth is hotter than at any point in the last 125,000 years, when entire countries are disappearing below rising seas, when severe weather events are rampaging across the globe, when wildfire season is no longer just a season, when tens of millions are being displaced from their homes, and when our planet is in crisis.
NFTs - as artist Everest Pipkin says - are “nothing short of a crime against humanity”.