Friday, June 14, 2024

NFTs are hot. Just like their effect on Earth’s climate

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For digital artists, the allure of blockchain is a new model of ownership. Cryptographic art is no more secure from copiers than anything else published on the Internet; a person can easily record a video or capture an image and proudly display the replica on their desktop. But with an NFT, the owner purchases a verified token providing digital proof that the art is theirs – much like an artist’s signature. The idea is to offer a semblance of authenticity naturally imparted to physical art. After all, most people would say that a perfect copy of a Mondrian summary painted on your garage door is not the same as the one created by the artist. Why couldn’t it be the same for a .CAS file? One advantage of the model is that ownership can be extended to the resale of this token, allowing performers to continue to receive a cut.

The trade-off is that this model consumes lot of energy. The main NFT art markets, which include MakersPlace, Nifty Gateway and SuperRare, make their sales through Ethereum, which maintains a secure record of cryptocurrency and NFT transactions through a process called mining. The system is similar to the one that checks Bitcoin, involving a network of computers that use advanced cryptography to decide whether transactions are valid – and in so doing, uses power on a small country scale.

How exactly this energy use translates into carbon emissions is a very controversial topic. Some estimates suggest that up to 70 percent of mining operations could be powered by clean sources. But that number fluctuates seasonally, and in a global energy grid that runs primarily on fossil fuels, critics say energy use is energy use. Some popular mining hot spots due to cheap hydropower, like Missoula, Montana, have banned new operations on the grounds that even “clean” mining would push neighboring energy users to dirtier energy sources. Ethereum developers have plans to move to a less carbon intensive form of security called proof of stake through a plan called Ethereum 2.0. But this has been going on for years and there is no clear deadline for the change.

“If you look at how much energy we’re going to spend in the meantime, that’s ridiculous,” says Fanny Lakoubay, a crypto art collector and advisor. Ethereum has become the platform of choice for digital art sales because it was designed to handle digital transactions that go beyond cryptocurrency, using a system called smart contracts. And as the second largest blockchain platform after Bitcoin, it was known to be quite reliable, with an established community of developers. There are alternative blockchains, some of which already use proof of stake, but they are seen as less established – and perhaps less permanent, explains Lakoubay. This makes them less attractive to art buyers who want their claims on very expensive things set in digital stone.

Until recently, the NFT art world hadn’t given much thought to energy use, Lakoubay says, because the community of artists and collectors was tiny. Digital art sales weren’t driving the computers that ran Ethereum; it was due to other things, like cryptocurrency speculation. Lakoubay was pleased to see the recent growing interest in crypto art. But it was also a little scary. “I have advised collectors not to be too crazy right now,” she says. “It is certainly not the art market that drives up prices.”

Add up energy consumption

Lemercier knew that energy was involved in anything on the blockchain, but he was unsure of the impact of releasing a set of artwork and struggled to find information. He felt that a handful of transactions would certainly mean little, especially compared to his usual process of creating and shipping physical objects. And the possibilities were enticing. He liked the new model of ownership, which seemed to have fewer barriers to emerging artists than the traditional art market. Lemercier therefore found a compromise: heating was by far the biggest energy cost in his studio, so he would invest part of his crypto revenues in better insulation.


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