In February, the global environmental group WWF unveiled an NFT called Tokens For Nature. It contains 10 endangered species, including Amur tigers, mountain gorillas, and giant pandas. The purpose of the WWF was to use all of the profits from selling NFT for endangered animal conservation activities. Sales were closed in two days, and proof shots of purchase were posted on SNS. As endangered protection activities and limited edition NFTs met, new synergies appeared.
But the project didn't last long. This is because environmental groups and individuals protested that NFT is one of the causes of destroying the environment.
Do NFTs really destroy the environment, as they claim?
(Picture from Unsplash)
NFT is the acronym of Non-Fungible Token, which literally translates to 'non-replaceable token'. NFT uses blockchain technology to prove the owner of digital assets and prevent unauthorized copying. NFT is a data unit that certifies that the original digital file is unique and is stored in a digital ledger distributed as a blockchain so that it cannot be manipulated arbitrarily. Blockchain is a collection of data to be managed divided into blocks and then each block is connected to each other in the form of a chain. By using these blockchain technologies to apply NFT to specific digital work files, creators and ownership of digital assets can be protected.
Unlike cryptocurrency, NFT has a separate unique recognition value and cannot be exchanged with each other. NFT has the characteristic of proving its value that digital assets are irreplaceable and scarce, so its use has recently increased significantly in various fields such as art, music, games, e-sports, fashion, and real estate.
However, some raise environmental issues for the NFT. The core of the criticism is that NFTs created and hosted in the blockchain consume a lot of electricity in the process.
The claim that NFT destroys the environment is due to the amount of electricity consumed in the manufacturing process. This is because NFT, a cryptocurrency-based company, used a blockchain "mining" method that is energy-intensive and uses a large number of computer networks. The NFT production process, called "Minting," has led to criticism that the NFT is an accomplice in environmental destruction.
NFT is mostly made based on Ethereum blockchain. Ethereum, like Bitcoin, was mined using a Proof-of-Work (PoW) method. "Proof of work" refers to an agreement algorithm that proves that the task of adding a new block to the blockchain has been completed. The task proof method is a technology that uses the CPU's computational processing power, and strong security is an advantage, but it also has a disadvantage of using a lot of electricity.
Therefore, it is unreasonable to conclude that NFT adversely affects the environment. In the process of creating and trading NFT, it is created as a blockchain to secure uniqueness and trade as a virtual asset, and NFT is misunderstood as the main culprit of environmental pollution due to carbon emitted in this process.
To be exact, the "Proof of Work (PoW)" method, which is a blockchain configuration method that issues and trades it, uses a lot of energy, not the NFT itself.
For this reason, the use of Proof of Stake (PoS) algorithms instead of PoW (Proof of Work) methods has recently become a trend. "PoS" is a method of paying according to the owner's stake when issuing a new coin.
Unlike proof of work, it does not rely on high-spec hardware for mining, and does not require competition between nodes for validation, so it is relatively energy efficient. Currently, the engines that mainly issue NFTs are Ethereum and Solana, all of which use the equity certification method.
Earlier this year, Ethereum 2.0 also stopped using graphic cards to prove its work and switched to a method of proving its stake. Through this, Ethereum currently consumes about 0.01 TWH of power a year. This is only 3.8% of the 0.26 TWH used by PayPal per year.
The Ethereum equity certificate, which uses electricity the most in the process of issuing NFT, also has a single Ethereum transaction power consumption of only about 0.03KWH. In addition, the carbon footprint is 0.02kg, similar to 44 transactions handled by Visa Card.
The main net of tech media company Publish uses the 'Proof-of-Authority (PoA)' method. The main net that uses the authority certification method is Luniverse Mainnet, which uses 0.0000023TWH (2300KWH when converted to kilowatts) per year.
"In terms of transaction figures, the power consumed when publishing NFTs is less than 0.26WH," Publish said. "This is 0.65% of the power used by 40W incandescent bulbs for an hour, minimizing the impact on the environment."
Rather, NFT can be used as a means for 'green' activities. Many NFT projects are already making various attempts with the aim of 'green'. The use of renewable energy when creating and trading NFTs also helps reduce carbon dioxide emissions.
Although it failed, the aforementioned WWF case was also initiated to support endangered protection activities. "Our polygon blockchain is environmentally friendly," WWF said, announcing the suspension of the project. "The carbon generated by trading one NFT is only about one cup of tap water," he said. "We will fully evaluate the results of this activity and find the best way."
IMPT is also a representative eco-friendly project. IMPT is a carbon emission rights ecosystem hosted on the Ethereum blockchain and is mainly recommended to investors interested in environmental issues. IMPT is a method of partnering with more than 10,000 companies and providing IMPT tokens when individuals purchase their products. The tokens received can be converted into carbon credits issued in NFT and can be sold again in the market. The price of the first stage was $0.018 per token, and the pre-sale ended on November 25.
Wild Earth, a South African wildlife streaming network, sold 25 animals, including leopards, lions, and hyenas, in NFTs. Forty percent of the proceeds from the sale and eight percent of the resale amount will be delivered to the animal's habitat manager. As of December 20, 1,065 tokens were sold and $13,900 (about 18.17 million won) was raised.
The "Algorand" project also has eco-friendly characteristics. Algorand, a blockchain, is a equity certificate coin that allows creators to use only a small amount of energy when minting NFT. Launched in 2019 by Silvio Michali, a professor at MIT in the U.S., Algorand attracted users' attention for providing very fast transaction speeds to increase the use of cryptocurrency. Algorand has set a goal of reducing carbon from the beginning, and some of its transaction fees are used to purchase carbon offsets.
The "NFTree," which actually plants trees whenever NFT is mined and rewards producers with tokens, is also a project that focuses on sustainability. NFTree is designed based on the Pi Network, which is designed to fund tree planting worldwide. The amount of carbon dioxide that a planted tree captures is the same as the number of tokens it provides to the creator. Therefore, the fact that producers received a lot of tokens means that they played a role in environmental protection.
Kim Ki-hyun, director of Media Tech Company Publish, said, "Even though we are already applying NFT manufacturing technology that minimizes electricity use, it is unreasonable to point out only the enormous electricity use of the early blockchain as the cause of environmental destruction."