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Is there such a thing as an eco-friendly NFT?

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The market of non-fungible tokens (NFT) took off in 2021, becoming a $40 billion industry. However, environmentalists are increasingly worried about the ecological damage of this booming market.

Recently, the World Wildlife Fund (WWF) pulled its NFT fundraising project, following criticism of the high levels of power consumption involved in token minting and trading.

What Happened to WWF NFTs

The UK branch of WWF has launched 13 NFTs of endangered species, including a giant panda, a Galapagos penguin, a Borneo elephant and others. Each was depicted locked in a glass cage, and the idea was to raise money for conservation efforts. A few days later, he put the initiative aside.

The reason? Despite WWF’s efforts to minimize power consumption, activists insisted that its NFTs would still consume power. The WWF used the Polygon (MATIC) network to mint its NFTs, believing they have found an eco-friendly way to enter the world of NFTs. But critics were quick to point out that their NFTs weren’t as eco-friendly as they thought.

Polygon is a layer 2 solution, meaning it sits on top of the Ethereum (ETH) blockchain to improve performance. Ethereum is the most popular blockchain for NFT projects. But until Ethereum moves to a more sustainable system, its network will consume more energy each year than an average-sized country.

Polygon reduces transaction times, fees, and to some extent the environmental costs of Ethereum. However, Digiconomist’s Alex de Vries – an outspoken critic of crypto’s high energy consumption – pointed out that each Polygon transaction still consumes about 2,100 times more energy than the WWF had calculated.

Polygon can improve Ethereum’s performance in several ways, but when it comes to reducing its environmental impact, many believe that is not enough.

Can NFTs be green?

There are several estimates of the damage caused by NFTs to the environment, but it is difficult to know for sure. The problem is that creating each NFT involves a number of transactions on the blockchain, and each individual transaction consumes thousands of times more energy than, say, watching an hour of Netflix. In fact, one study estimated that the carbon footprint of a single NFT is equivalent to the monthly electricity consumption of an EU resident.

Worse still, thousands of NFTs are produced every day. It’s more than a few headline-grabbing works of art that cost millions of dollars. NFTs are certificates of ownership for all kinds of digital items, including music, videos, gaming items, and sports collectibles. These are the building blocks of various booming segments of the crypto industry, especially metaverses and blockchain games.

Currently, the majority of NFTs are minted on the Ethereum blockchain. Using Layer 2 solutions like Polygon can reduce the environmental impact somewhat. But the only way for NFTs to be much more environmentally friendly is to use other blockchains, or wait for Ethereum to complete its upgrade.

The good news is that several blockchains, such as Solana (SOL) and Tezos (XTZ), consume a fraction of the energy of Ethereum and are beginning to be used to manufacture NFTs. Popular NFT marketplaces such as Rarible already integrate Solana and Tezos. According to Solana, a single transaction on its network consumes slightly more energy than a Google search.

To be an environmentally conscious NFT marketer, it makes sense to understand the differences between blockchains so that you can research more sustainable networks. Using NFT marketplaces that support these networks, you can play a role in promoting industry-wide change.

At the end of the line

If the NFT industry shifted to other blockchains, NFTs could indeed be environmentally friendly. Unfortunately, Ethereum still dominates the NFT market, and it won’t complete its shift to a more sustainable model until at least 2023. In the meantime, it will take a concerted effort by all parties involved to reduce the environmental footprint of this industry by evolution.

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Emma Newbery owns Polygon, Ethereum, Solana and Tezos.

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