Crypto is like a double-edged sword, one good piece of news is followed by ten bad reactions. It’s like being the parent of the hyperactive kid in
Crypto is like a double-edged sword, one good piece of news is followed by ten bad reactions. It’s like being the parent of the hyperactive kid in the kindergarten — he breaks other kids’ toys, bounces off the walls like a demon and the other parents hate him, but you know he’s a sweet, thoughtful and kind soul who will one day find the cure for cancer.
And as you stand surveying the debris of his day in kindergarten with the other parents giving you the evil eye and the Montessori teacher sadly shaking her head, you cannot wait for that day to come soon enough.
So, in crypto, one step forward is the introduction of nonfungible tokens, or NFTs. Finally, something that everyone — including your non-tech or finance friends — can get their teeth into and understand.
I listened to a radio program yesterday where during the weekly film roundup a reviewer spoke about Quentin Tarantino producing NFTs of unused pages of his Pulp Fiction script. Sure, he is being sued by Miramax, but the reviewer positively salivated over the term NFT.
“I’m not tech or finance,” she said. ‘But I like talking about NFTs and Tarantino.”
So NFTs are mainstream. Noobs still get hung up on the Beeple sale ($69 million at Christie’s in March) much in the same way the OGs regard the eye-watering 2017 Tezos ICO that raised $232 million or BlockOne’s epic twelve-month raise of $4 billion the following year. These are the milestones when the money gets silly and crypto gets onto the mainstream news feeds.
But, the backlash has already begun. The amount of energy “wasted” in generating NFTs is a very serious issue currently doing the rounds. If using energy to produce cryptocurrency is seen as wasteful, then expending large amounts of energy to create NFTs of low-resolution cartoon JPGs sounds positively frivolous. A sort of let them eat cake moment in crypto history.
This is why it is good to seek out educators who can balance the rhetoric, to counter the inbuilt prejudice or sheer misinformation bandied about like gospel.
The Plane truth
Gary Nuttall, an emerging technology consultant with Distyltics, and a recent finalist in the prestigious U.K. CryptoAM Education Awards, is in demand to explain all things crypto. When I spoke with him, he had just hopped off a webinar with bankers. He wears a shirt (to impress the bankers) and a hoodie (to prove his tech credentials), but finds himself answering the same questions again and again.
“The Silk Road and money laundering in crypto is still a top question,” he says, as he visibly sighs. “And I point out to them that the most money laundering is executed in the U.S. dollar. We have a way to go.”
Nuttall begins by addressing layer-one blockchains and the energy charges.
“Talking about layer-one blockchains being energy expensive to mint NFTs misses the point entirely. For example, on the Bitcoin blockchain, a block is produced every ten minutes, while on Ethereum it’s more like every 15 seconds – these blocks are going to be produced regardless of whether or not there are NFTs onboard.”
Nuttall compares it to a plane going from London to New York. “The plane is going anyway, where or not every seat is filled.”
So what is the carbon footprint of NFTs?
The Cambridge Bitcoin Electricity Consumption Index (CBEI), housed in the Judge Business School at the University of Cambridge, UK, has been tracking Bitcoin since 2019. In its most recent findings published in May 2021, the CBEI reported that Bitcoin mining currently consumes 133,68 terawatt hours a year of electricity – consistently rising year each year from when this research began.
Similar studies into the carbon footprint of Ethereum produce similar results. Digiconomist estimates a single Ethereum transaction’s carbon footprint at 33.4kg CO2 and each time an NFT is minted or sold, that’s another transaction. These estimates point to a single NFT transaction is likely to have a carbon footprint more than 14 times that of mailing an art print.
Both Bitcoin and Etheruem use proof-of-work (PoW) mining, which is associated with significant carbon output. In the Ethereum ecosystem, this is being addressed by layer-two solutions such a Polygon and the forthcoming move to proof-of-stake (PoS) with Eth2, but for now, the NFT marketplaces are still plagued by high gas fees.
In May, The Financial Times called Bitcoin a “dirty currency.”
“The Bitcoin ecosystem itself accounts for the same amount of energy consumed by the Netherlands,” says Nuttall. “Which is a lot until you consider that it’s only half the energy consumed by TVs left on standby overnight in the U.S. Perspective.”
Nuttall has a more unique perspective when it comes to explaining the link between cryptocurrency and energy.
“I see it as an alternative way of storing energy consumption. Consider an electricity company operating a hydroelectric dam. When…
cointelegraph.com