In the last few years, following the sales of numerous individual NFTs and NFT collections, many more people have become interested in the industry. Still, they have actively taken steps to be part of it—artists and collectors alike.
The technology behind NFTs is fantastic. Thanks to NFTs, key challenges that artists and creators have faced have been solved; digital files of their works can now be made unique and verifiable as original versions on the blockchain.
Although this technology is a welcome development, it hasn't come without its challenges, like any other new technology. While different challenges plague this new technology, the most conspicuous of them is the rate at which some NFTs consume immense energy.
This article will look at the relationship between NFTs and energy consumption and their impact at present and in the future.
How Do NFTs Consume Energy
NFTs do not in themselves consume an immense amount of energy. Instead, the blockchain on which an NFT is stored is what determines if it will be an energy-guzzling non-fungible token or not.
An NFT is a data unit stored on the blockchain; different blockchains support NFTs. Ethereum, Solana, and Flow blockchains, among others, are blockchains that support NFTs. While the Ethereum blockchain uses a massive amount of energy to carry out its transactions, including its NFT transactions, Solana and Flow Blockchains and others only require a little energy. This is why not all NFTs consume huge amounts of energy.
Ethereum is the second-largest blockchain after Bitcoin, and it's also the blockchain that supports the largest number of NFTs. To validate and secure transactions on the blockchain, Ethereum operates on a consensus mechanism called "proof of work."
Proof of Work, Energy Consumption and NFTs
Proof of work consensus is a mechanism that requires a network of miners to dissipate effort using high-powered computers. This is so that they can compete to solve complex mathematical problems to validate transactions on Ethereum.
Financial transactions are monitored and secured by centralized financial institutions in the real world. This makes it easy to keep transactions secure and verify the authenticity of transactions.
Blockchain technology, however, is based on the concept of decentralization. Therefore, there's no centralized institution verifying and confirming the authenticity of transactions. The need to develop efficient systems for validating transactions on the blockchain led to the creation of the proof-of-work consensus mechanism.
Although this mechanism is very efficient, the drawback is that it requires an immense amount of energy to function optimally. To solve the complex mathematical algorithms required to validate transactions, miners need to use high-power, energy-consuming computers. These computers use up a lot of energy and, as a result, emit a lot of carbon into the environment.
Although NFTs do not consume energy, those stored on the Ethereum blockchain do every time an action is taken. For example, processes involving mining an NFT, bidding, canceling a bid, selling and reselling an NFT, and even artists' releases of multiple editions of the same NFT consume a large amount of energy.
Every activity involving NFTs on the Ethereum blockchain consumes energy, so NFTs stored on this blockchain use a huge amount of energy.