How Do NFTs Impact the Environment?

How Do NFTs Impact the Environment?


Key Takeaways

  • The technology behind NFTs has immense potential in terms of application, though some questions arise about its environmental impact. Some NFTs operate on power-intensive Proof-of-Work (PoW) mechanisms, but more NFTs have been created under more eco-friendly Proof-of-Stake (PoS) models.

  • The carbon footprint of NFTs has not been proven statistically. Blockchain transactions related to NFTs are not high in volume and cannot be compared in terms of carbon emissions to transportation, logistics, and industries used in physical artwork production.

  • All technological progress has an environmental impact, but the underlying technologies improve and become more efficient and eco-friendly over time.

The growth of the NFT market in recent months has led to a surge in discussions related to the environmental impact of such blockchain-based activities. The biggest concerns include accusations that NFTs result in high carbon emissions since they are produced using power-intensive Proof-of-Work (PoW) blockchains like Bitcoin and Ethereum.

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But NFTs are more than their environmental impact, as not all NFTs are powered by PoW models, and many have vast potential in shaping the modern world. As such, it is necessary to strike a balance between technological advancements and environmental sustainability when considering the real benefits that NFTs can have for society and the global economy.

Why Do NFTs Emit Carbon?

Non-Fungible Tokens are largely issued on PoW networks, the largest of them being Ethereum. Such networks rely on coin mining, which requires vast amounts of energy to conduct complicated calculations using advanced computers and specialized mining hardware. The equipment requires a lot of power and produces considerable amounts of heat, resulting in carbon emissions.

If taken in an absolute sense, anything hosted on blockchain technology emits carbon. But given the prominence that many NFTs have received due to media coverage, they have been heavily associated with energy-intensive and carbon-emitting activities.

Do NFTs Have a Direct, Causal Relationship With Carbon Emissions?

NFTs most likely do not have a direct, causal relationship with carbon emissions.

The first reason is that NFTs are leveraging existing blockchains like Bitcoin and Ethereum, which are running on PoW consensus algorithms and require immense amounts of energy. The electricity is used to run the mining hardware and cool it. Most mining facilities are still based in China, which relies heavily on coal and other fossil fuels for energy production.

Another reason is the hype around NFTs that has been attracting more people to the Ethereum network. These new market participants buy more ETH, increasing network usage and driving more CO2 emissions. The more a blockchain is used, the more energy it requires.

From a technological standpoint, the accusations are true, but arriving at an exact amount of CO2 emissions generated from NFT transactions is impossible. The reason is a lack of statistical data and the fact that NFTs make up a tiny portion of all blockchain use cases.

NFTs’ Impact on the Environment, As Compared to Traditional Art

If CO2 emissions are to be taken as a benchmark for evaluating the environmental impact of NFTs, then tangible forms of art have been around considerably longer and exact a heavier toll on the environment.

Physical forms of art require means of production that involve chemical industries, ore extraction, precious metal and wood processing, transportation, and a lot of other energy-intensive activities. The numbers involved in the environmental impact of traditional art are also much more difficult to calculate since there is no specific data related to artwork except for tentative statistics.

Nevertheless, even if we consider only one industry involved in the creation and distribution of traditional art, the carbon footprint from this activity becomes considerable. For this instance, let’s consider global logistics as part of traditional art. Unlike physical artworks, NFTs do not need to be transported, since they are digital and can be sent instantly at an inconsiderable fraction of the carbon footprint an aircraft or cargo truck would have when transporting a painting or statue. The delivery of materials needed to create art is also in play, as logistics and transportation are the biggest carbon emission producers on the planet.

The ultimate goal with assessing environmental impact is always to lower carbon footprints. Statistically speaking, in some cases, NFT artworks may even have lower emissions than their physical counterparts, even when using PoW blockchains.

Proof-of-Stake And Its Role in Reducing NFT-Related Emissions

Contrary to some accusations, many NFTs are created on blockchains with Proof-of-Stake (PoS) models, which are not as energy-intensive, since they do not require every miner to maintain their own mining equipment. Instead, PoS requires only a limited number of powerful nodes to run the network by validating transactions after receiving a necessary amount of stakes from coin holders as a vesting of trust.

By refraining from using gigantic mining facilities, the PoS model is generally recognized to be more eco-friendly than PoW. In addition, PoS networks are considered more profitable, since they provide passive income generation through DeFi . Many NFT marketplaces and creators are thus migrating to PoS networks. Even Ethereum is on the way to transitioning to a PoS model under the Ethereum 2.0 update.

An example of a blockchain platform that reduces the environmental impact of NFTs is the Binance NFT Marketplace , which uses the Proof of Staked Authority (PoSA) network – a combination of Proof of Authority (PoA) and PoS – which is environmentally friendly, energy-efficient, and sustainable. Making the Binance NFT Marketplace even less blockchain-use-intensive is the fact that it is accessible to all users without the need to have multiple accounts.

NFTs Are More Than Their Environmental Footprint

Given their extensive use cases as proof of ownership and real-world asset digitization instruments, NFTs have more value than the initial hype associated with their rise in popularity. NFTs are some of the most applicable crypto assets with utility value that serves the purpose of making the transition to Web 3.0 – the decentralized, intelligent evolution of the Internet – possible.

Some NFTs also support good causes like charity, as they allow creators and artists to receive fair rewards for their creativity and ensure everyone’s compliance with intellectual property rights. The potential of NFTs is only just being tapped, and many platforms are joining the cause of promoting the benefits the technology can offer.

In an effort to support the vast potential of NFTs, Binance has also launched various premium drops in esports, sports, gaming, and arts to further empower the community. The NFT for Good event hosted by Binance NFT Marketplace and Binance Charity is one example of how NFTs provide artists with opportunities to transform their creativity into social good efforts to give back to society.


The blockchain-based transactions that support NFTs do emit some CO2. In an effort to mitigate this impact, many creators and NFT marketplaces are looking for alternatives and are continually improving the industry. Major blockchain networks are also joining the cause by transitioning to more energy-efficient models like PoS.

The potential of real-world applications for NFTs is vast. It is also clear that any technological innovation will have its corresponding environmental footprint, be it internal combustion engines, AI, machine learning, or smartphones. Everything requires production capacities and energy to run it. But the passage of time leads to improvements to existing technologies, just as electric cars are phasing out internal combustion engines. Innovations are essential for progress, so it is important to find a balance, and blockchain innovations – NFTs in particular – are already taking strides in that aspect.

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How Do NFTs Impact the Environment?
DexStrats 22 August, 2021
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