NFTs are hot. So is their effect on the Earth’s climate

For digital artists, the appeal of blockchain is a new model of ownership. Crypto-art is no more secure against copies than anything else posted on the internet; a person can easily record a video or take a picture and proudly display the replica on their desktop. But with an NFT, the owner buys a verified sign that provides digital proof that the art belongs to them – a bit like an artist’s signature. The idea is to give a little shine to the authenticity that is naturally assigned to physical art. After all, most people would say a perfect copy of a Mondrian summary painted on your garage door is not the same as the one created by the artist. Why can’t the same apply to a .CAS file? A bonus of the model is that the ownership can be extended to the resale of the sign so that artists can still receive a discount.

The compromise is that this model consumes a lot of energy. The major markets for NFT art, which include MakersPlace, Nifty Gateway and SuperRare, are keeping 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 system that verifies Bitcoin, with a network of computers that use advanced cryptography to decide whether transactions are valid – and thus use energy on the scale of a small country.

How exactly energy consumption is translated to carbon emissions is a very controversial topic. Some estimates suggest that as much as 70 percent of mining operations may be powered by clean sources. But the numbers vary seasonally and in a global energy network mostly used on fossil fuels, critics say energy consumption is energy consumption. Some mining sites that are popular because of cheap hydropower, such as Missoula, Montana, have banned new operations due to concerns that even ‘clean’ mining will push adjacent energy consumers to dirtier energy sources. Ethereum’s developers have planned a move to a less carbon-intensive form of security, called ‘proof-of-stake’, via a blueprint called Ethereum 2.0. But this has been going on for years, and there is no clear deadline for the switch.

“If you look at how much energy we’re going to spend in the meantime, it’s ridiculous,” says Fanny Lakoubay, an art collector and advisor. Ethereum has become the preferred platform for digital art sales because it is 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 fairly reliable, with an established community of developers. There are alternative blockchains, some of which already use evidence of the game, but are considered less established – and perhaps less permanent, Lakoubay explains. This makes them less attractive to art buyers who want them to claim very expensive things engraved in digital stone.

Until recently, the NFT art world did not use as much energy, Lakoubay says, because the community of artists and collectors was small. Digital art sales have not driven the computers that run Ethereum; this was due to other things, such as speculation of cryptocurrencies. Lakoubay was delighted with the recent growing interest in crypto art. But it was also a little cramped. “I advised the collectors not to go too crazy now,” she says. “It is certainly not the art market that is causing prices to rise.”

Add the energy consumption

Lemercier knew that energy was involved in any blockchain, but he was not sure about the impact of the release of a set of artworks and struggled to find information. He certainly reasoned that a handful of transactions would not cost much, especially not compared to his usual process of creating and shipping physical objects. And the possibilities were tantalizing. He likes the new model of ownership, which apparently poses fewer obstacles for emerging artists than the traditional art market. So Lemercier made a compromise: heating was by far the biggest energy cost in his studio, and therefore he would invest a portion of his crypto yield in better insulation.

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