The virtual landscape continues to expand with the latest technology and inventions creating new capital ventures. Society’s newest interest in the world of crypto-goods has sparked a revolution of digital currency, videos, artwork and even homes to sell at unprecedented prices.
Although these digital assets exist in an artificial realm, their operations could permeate into the physical world with potentially negative consequences to the environment.
While cryptocurrencies such as Bitcoin and Ethereum may be more well known within this domain for their market value, non-fungible tokens, also known as NFTs, have become a part of the craze.
NFTs are a unique digital asset with a certificate of authenticity for the content, such as a piece of art or a highlight play in sports, proving that the work is the original through a specific code. Most NFTs are supported by Ethereum’s blockchain, but others can use their own.
The process of maintaining these crypto blockchains require energy-guzzling mechanisms that consequently heat up the planet. Aside from the amount of electricity needed to power cryptomines, the physical locations where these computer blockchains are stored, the heat and cooling necessary to upkeep the operation emits an immense amount of carbon dioxide.
Researchers estimate that crypto-mining can produce 3-15 million tons of global carbon emissions and uses more energy than a small developing nation.
To store, harvest and mine crypto-products, large warehouses are lined with rows of computer hardware to hold and verify digital assets. These are powered 24/7 so crypto owners could have readily available access to the products. If these mines were to shut down, owners would lose access to their collections.
The market is driven by the notion of artificial scarcity — the limitedness of a good that can readily be produced. Even though you could probably see the same content on the internet for free, the codes on NFTs give value to the goods while also having transparency for their price sold, allowing the original creator to continue profiting from their work. Many compare owning an NFT to owning the original Mona Lisa artwork: you could have many altered copies but there’s only one authentic piece available.
Despite the notions from skeptics of this speculative bubble, consumers are willingly doling out money to purchase these digital assets. In March, an artist sold a collection of digital art for $69 million. Before that, a highlight slam dunk by Los Angeles Lakers superstar Lebron James sold for $200,000 on NBA Top Shot, the NFT marketplace for rare NBA moments.
The market for crypto could grow larger than its current phase with these products being hot commodities for money-hungry profiteers. And with that, more cryptomines could come about if there proves to be a demand for the product, causing exponentially more harm to the planet just to see a glorified jpeg file.
There are mixed opinions among experts on whether the world of crypto has a sustainable market to last or if it’s another bubble that’s going to pop. Regardless, consumers should be aware of the insensible output and overabundance of resources it requires to maintain their digital goods.
A large number of mining operations utilize clean sources to power their networks, but the number fluctuates year to year. Even so, their use of clean energy could force others in their area to turn to dirty-energy sources if sustainable resources become scarce.
Blockchains, such as those used by Ethereum, use a substantial amount of energy, whereas NFTs, such as NBA’s Top Shot, is supported by a Flow blockchain which uses less electricity than the former but resides in a centralized network. Some cryptomines operate in cooler environments and utilize renewable energy, putting a smaller mark on their carbon footprint and proving that there are better alternatives to the process.
With the trend picking up steam lately, it wouldn’t be surprising to see more cryptomining operations arise while still remaining unregulated and decentralized from a governing body.
Perhaps the crypto-market does continue to return a demand and proves to be profitable for early investors, but whether the bubble grows or pops, a more efficient and sustainable practice needs to be introduced for the success or failure of the market.
Although NFTs provide an untapped market for the creative community and should be completely disregarded for their implications, their expansion should drive innovation where new environmental practices can be reached. If the business continues to grow at its current trend, less energy-inducing methods must be undertaken for it to become a sustainable practice.