NFTs and The Environment: Is it as bad as it seems?
In this article, we take a closer look at the environmental footprint that comes with NFTs, how the technology actually works and why things are not as dire as some believe, and what all of that actually means for Esports Heroes.
Why do NFTs emit carbon and what is their impact?
Perhaps the biggest factor of the bad reputation NFTs have, is due to the model of operation they used to have, how they were “minted” and the energy required for that. However, as we will explain below, things have dramatically evolved for this upcoming technology and are not as dire as they used to be in the last few years. Let’s see how NFTs used to operate before and what has changed today:
The majority of NFTs (Non-Fungible Tokens) are issued on Proof of Work and Proof of Stake networks, with the biggest and most popular one of them being Ethereum.
Typically, Proof of Work networks consume a lot of energy in order to mine coins and solve complicated calculations on the blockchain. The equipment required for that is usually specialized mining hardware or very advanced computers. To put that into perspective, think that there are specialized centers that run these machines just for that particular purpose. Consequently, these powerhouse machines require a lot of energy and power to operate and produce a significant amount of heat, which results in carbon emissions. Although minting NFTs never required quite as much energy as mining coins, these chains didn’t have the proper infrastructure needed to support better operation, such as lower energy requirements or faster transactions. This was one of the main reasons there was an apparent urge for things to change in that direction.
On the other hand, The Proof of Stake model is now a widely preferred method, due to its efficiency and solving the main issues the previous chains faced. One of the biggest differences between the two is the amount of electricity used. Proof of Work uses significantly more energy because of its authentication model that uses high-powered computers, while the energy consumption is significantly less for Proof of Stake, because it chooses validators randomly instead of miners completing complex puzzles. Transaction times are also quicker, which uses less energy.
As an example, Ethereum (the second largest cryptocurrency after Bitcoin), which we pointed out as being one of the main and most used chains for NFTs, has recently fully transitioned from Proof of Work to a Proof of Stake model, which resulted in approximately 99.5% reduction in CO2 emissions; an impressive and understated feat that we need to underline.
In theory, anything operating on the blockchain or any PC and the internet, for that matter, requires energy and results in some form of carbon emission.
NFTs specifically though, have received a lot of attention from mainstream media, due to their rise in popularity in the past few years. This explains the initial reaction and backlash NFTs received and while the concerns were initially justified, it’s important to acknowledge the progress and improvements made today, when we talk about the topic.
How do NFTs compare with other energy-intensive activities and industries and why do so many people invest in this technology and believe it has a future?
NFTs have shifted to better alternatives when it comes to their production and have made big progress in going greener. Most people think of digital art when they hear NFTs, which is one of the main things they are used for. How does that compare with traditional art though and in reality, which one of them has made more progress in a shorter time frame and can now be considered more environmentally friendly?
Comparing the environmental footprint of traditional art vs. NFTs.
When we want to understand why people who are informed of the blockchain technology are very hyped for it and believe it yields a lot of benefits for the future, we can take a small example of how every-day things we do currently may be better done using the blockchain.
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. Comparing all these factors with the very low emissions of NFTs in our days, it becomes apparent that things have shifted heavily in favor of the blockchain technology. Combine that with all the other advantages that come with this technology, such as improved asset security, lower maintenance cost and wider accessibility, we have just a few examples that make them much more appealing to a wider audience, should they have the proper base knowledge on how to utilize them.
CO2 emissions of other industries remain higher, by a huge margin.
When we talk about environmental impact, we need to consider all things around us and how they affect the environment as well. It is not logical to point the finger at only one part of the issue (NFTs in this case, which we already tackled how in reality it’s not even a real issue anymore) while not talking about others. Let’s take for example the fashion industry. According to Ngan Le at Princeton, “the fashion industry is currently responsible for more annual carbon emissions than all international flights and maritime shipping combined.” However, these issues don’t take center stage as often because they have been around for way longer and most people are not even aware of these statistics, which when put into perspective, really show where our focus for a greener tomorrow should be.
Admittedly, there are efforts being made in that direction across all industries, fashion included, but the issue at hand here is much harder to tackle than it is for the NFTs, simply because way more factors are involved and change towards another direction will require a lot more time.
NFTs can be “green” for the environment as well.
We touched upon how NFTs compare to other industries today and how they are not as bad for the environment as most people believe. What we didn’t talk about yet, is how NFTs can also help the environment through different initiatives, which not only dismantles the myth that NFTs are harmful (especially true in many gaming communities), but reinforces a strong foundation and thesis about them being in aid of a greener tomorrow. Let’s take a look at some of these actions and how one can use NFTs to offset CO2:
Tree planting.
One area that is becoming prominent among NFTs is the planting of new trees. In its most basic form, users can buy an NFT that represents a tree that will be planted by the respective project. As the NFT operates on the blockchain, it is possible to get a full overview of the tree-planting process in a transparent manner.
Charitable donations.
A number of NFT projects actually make sustainable donations to charitable causes. This is funded through the transaction fees that are generated when NFTs are bought and sold. When the project collects transaction fees, it can donate a portion of the funds to environmental causes. In turn, this can actually result in the blockchain becoming carbon-negative, meaning that it does more good than bad to the environment.
Alternative minting processes.
Besides all those, it’s becoming increasingly popular among creators to use different processes for minting their NFTs (minting = the process of converting digital files into a crypto asset stored on the blockchain). For instance, ‘batch’ minting enables creators to mint an entire NFT collection through a single transaction. Another innovative minting method is to opt for ‘lazy’ minting. This enables creators to mint a new NFT collection, but the transaction for each token does not require a blockchain movement until a sale is made. After all, many creators will mint an entire NFT collection and perhaps only sell a small portion of the allocation. This means that unsold NFTs will not require a blockchain transaction.
What NFTs will we use in Esports Heroes?
With all the above in mind, we need to address the NFTs that will be used in our game as well. As we briefly mentioned in our Digital Ownership 101 article, Esports Heroes is committed to using NFTs that will have minimal impact on the environment, as our aim is to bring this technology to as many people as possible, while making it as accessible and user-friendly as we can. With that said, we’re also tackling the other issue we mentioned earlier, the general complexity of it all. We are bringing ways to the players that will enable them to access all the perks that come with NFTs, without having to go through complicated and extensive research on wallets, chains, marketplaces etc. Alongside those things, it’s important to note that we will be using a Layer 2 solution for our NFTs, which means less transactions and less energy will be required for all the operations we will have on the blockchain. Lastly, it’s noteworthy that Esports Heroes will not utilize a mineable coin, in our effort to remain as CO2 neutral as we can. Our main focus is to make the F2P to NFT transition seamless, so that any player who enjoys Esports Heroes will be able to have access to it, should they choose to utilize that part of the game, besides the F2P side. More details about how all of that will be introduced, will follow in the coming months as we approach closer to the launch of the game.
Conclusion:
The gaining traction NFTs have received in the past years has been notable by many users in most industries. When looking at things objectively, we need to consider the facts as they are today and factor in the ever-changing nature of the technology. As things for NFTs progress fast and move to a better direction, it’s important to acknowledge how far they’ve advanced in such a short period of time. If that’s a glimpse of how things will continue to go in the next few years, we can expect revolutionary things from this groundbreaking technology, in ways that will affect many industries, including the gaming one. We’re still relatively early on this exciting ride and are ecstatic to share it with all of you… Are you coming along?
