NFTs, cryptocurrencies, and the hidden environmental impact

If you were to select a random person from both 1922 and 2022, it's very likely that they would dress completely differently, speak with different slang, and even have wildly varying worldviews. A lot can happen in one hundred years. One thing that both subjects would surely be interested in is the opportunity to get rich quickly. It is easy to see the initial appeal of cryptocurrencies and NFTs with the viral stories of overnight success and unthinkable amounts of money. Like the gold prospectors of the mid-1800s in California, the chance at wealth attracts folks like moths to a flame. 

In the rush to dive headfirst into cryptocurrencies and NFTs, those with dollar signs in their eyes may lose sight of the bigger picture. While we don’t associate the creation of these digital objects with hard manual labor, they do require obscene amounts of energy to be born into the cyber landscape. That energy has to come from somewhere and while the world continues to drag its feet when moving towards cleaner sources of power, we must still burn dinosaur bones and trigger nuclear reactions to produce the required juice.

Many cryptocurrencies are mined in power-hungry farms where owners exploit municipal or private power grids as long as the mining operation remains profitable. These crypto mining operations are happening now all over the globe and it is estimated that they are consuming as much as 91 terawatt-hours of electricity annually. 

To put that into perspective, that’s more juice than the entire nation of Finland uses in a year and seven times the annual consumption of Google’s global footprint. Let’s take the energy used up by global crypto mining every hour and put it towards a different job. Everyone who grew up in the late 80s and early 90s remembers the Sega Game Gear and its proclivity for eating batteries (aka energy). The energy used by one hour of global crypto mining could be used instead to power 2.3 million Game Gears non-stop for a calendar year.

While NFTs seem a bit less hungry than massive crypto farms, they also require lots of computing power (energy) to handle encryption and validation on the blockchain ledger. One digital artist estimates that producing six works of crypto-art used more electricity than her entire studio consumed over a two-year period. Some alternate methods for creating NFTs have come onto the scene recently that could have less of a carbon footprint by using proof of stake transaction validation as opposed to the power-hungry proof-of-work validation with traditional NFTs.

One NFT marketplace began advertising their intentions to combat the environmental impact by selling carbon offsets, or credits representing a stake in an environmental project. In theory, putting money towards planting a forest that filters twice the amount of carbon emissions produced by NFT creation sounds nice, but there is no real data available to validate the claims.

Feel free to get out there and chase those waterfalls. Just understand that there is no such thing as a free lunch and whatever deal we may be getting by exploiting the planet for short-term financial gain could bring along a much higher debt in the not-so-distant future.

Chris Jarrard

Contributing Tech Editor

Chris Jarrard likes playing games, crankin' tunes, and looking for fights on obscure online message boards. He understands that breakfast food is the only true food. Don't @ him.