NFTs: The hot new fad with a massive environmental cost

Authenticated digital art is skyrocketing. But few are aware that NFTs use 10 times more energy than other crypto transactions — a shocking waste of resources. 

Adrian Pforzheimer

Policy Analyst

People will collect anything. Baseball cards, stamps, Pez dispensers – somewhere, somebody probably has 10,000 of them. Some collectibles, like rare books or works of art, are valuable in large part because of their intrinsic worth or beauty. But whether the object is a Picasso or a Babe Ruth rookie card, it is generally true that the rarer the item, the more expensive it is likely to be.

Digital media defies scarcity, as anyone who has ever copied and pasted a file knows. The teenage years of the internet were spent in a push and pull between ownership and sharing, RIAA vs. Napster. The erosion of scarcity created by digital media provoked some interesting attempts to reestablish it, such as when the hip hop group Wu-Tang Clan recorded an album, Once Upon a Time in Shaolin, and created just a single physical copy. It sold in 2015 for $2 million.

New technology has shifted the balance yet again, allowing creators to establish the same scarcity for digital files as for physical objects by making them uniquely identifiable. Non-fungible tokens (NFTs, or “niftys”) are pieces of digital media with essentially a permanent, non-transferable sticky note attached by whoever creates, or “mints” it. Anybody with a digital platform — which these days is almost everybody — can mint one, authenticate it themselves, and cash in.

Instead of trading jerseys after games (discouraged due to COVID), NBA players now trade NFTs of highlight-reel clips, called “top shots.” Kings of Leon released their new album in the form of NFTs, with higher tiers offering exclusive album art and even front row seats to concerts. Nyan Cat, an early internet meme, earned its creator $580,000 in February. A collage of 13 years of online posts by a digital artist known as “Beeple” sold in March for $69,300,000.

“NFT mania” raises all sorts of discussions about the meaning of art and the value of virtual “objects.” But perhaps the most important thing about NFTs is their uniquely harmful environmental footprint.

And we’ve barely begun to talk about it. But we need to. Because while NFTs might seem like a fad now, allowing them to become established as the standard for ownership of digital artwork and collectibles could create a massive source of energy consumption for years to come.

In February, the French artist Joanie Lemercier was moved to cancel a release of several works after discovering just how substantial the environmental costs were. “My release of 6 CryptoArt works,” Lemercier wrote on his website, “consumed in 10 seconds more electricity than [my] entire studio over the past 2 years.”

Without delving too deeply into the inner workings of blockchain, at its core it’s essentially a database system that allows for secure transactions on the Internet. What powers this technology is a very long, complex and public ledger of transactions. A wide network of computers is constantly at work, checking to make sure the chain stays the same and that the only additions are authorized new blocks of data.

Cryptocurrencies like Bitcoin use blockchain to keep track of who owns coins and allow people to buy and sell them. Spending a bitcoin requires confirming the whole chain, which is relatively straightforward for a computer. Creating, or “mining,” a bitcoin out of thin air requires many advanced computers working fiendishly hard to quickly solve unimaginably hard math problems. It’s difficult and energy-intensive — on purpose.

NFTs are minted on the Ethereum blockchain, the second most popular after Bitcoin. One analysis found the energy footprint of the average transaction on this network is roughly 35 kWh — about the same as powering a refrigerator for a month. But NFT transactions also involve minting, bidding, selling and transferring a digital token. All these actions are costly, adding up to an average of 369 kWh — over 10 times as much energy. One researcher calculated that a certain artist selling two pieces of artwork used over 175 MWh, creating the greenhouse gas emissions of 21 years of a U.S. household’s electricity use.1

The energy cost of an NFT depends on the number of transactions rather than its selling price. An NFT sold for $1 million has a considerably lower impact than 100 NFTs that sell for $15 each. But as more artists join growing marketplaces, the low-cost, high-volume strategy is gaining popularity, which could lead to devastating environmental consequences. The danger is that NFTs become the key to a new market of digital collectables, thereby resulting in an inexcusable amount of wasted energy.

It’s common to think of the digital world’s energy use as negligible compared to real-world physical processes, like manufacturing and agriculture. Many people new to NFTs take this outlook, and they’re not to blame: How could moving around bits and bytes compare to trains and tractors? But the open secret behind crypto is that it’s powered by inefficiency. All that energy use is what makes the whole blockchain secure, why the sticky note confirming authenticity stays stuck to the NFT.

Blockchain isn’t fundamentally doomed: There are ways of chaining blocks together using trusted stakeholders instead of brute force work, which would significantly reduce emissions. If crypto enthusiasts manage to band together and pull off a switch to proof of stake, it would change the conversation — but like most breakthroughs, it’s always just a few years away. And the growing NFT trend is exacting growing climate costs right now.

One immediate step would be for online NFT exchanges to be transparent about the total carbon emissions associated with each sale. This would depend on voluntary compliance, but the public could put pressure on brands creating NFTs and marketplaces selling them to be forthright with the emissions created by each one. This wouldn’t make NFTs any less environmentally damaging in and of themselves, but at least it would enable people to judge the value of digital art while knowing the costs. 


  1. 21 years of household energy use calculated based on EPA GHG equivalency of energy use; 176,773 mWh figure via Joanie Lemercier on Twitter.↩︎



Adrian Pforzheimer

Policy Analyst

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