• Overview

    • While there may be benefits to artists and arts organisations from selling NFTs in the short-term, these should be carefully balanced against longer-term risks – as well as considering the environmental impacts of your specific NFTs.
    • Lower-carbon blockchain alternatives are available. Look out for “Proof-of-stake” blockchains that use a different methodology requiring only a tiny amount of energy use per transaction.
    • If thinking about using bitcoins and NFTs, then proceed cautiously and follow GCC advice outlined below.
    • If you do decide to work with NFTs, make sure you include them in your carbon calculations as they will likely make up a significant part of your carbon footprint. To put it into context, every transaction on the Ethereum blockchain produces a carbon footprint similar to a domestic UK flight.

     

     


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    What is Blockchain?

    The blockchain is a system that allows you to store transactions in a way that is impossible to hack. It is decentralised and transparent.

     

    Blockchain technology has great potential for use in the art world, for, among other things, securely and reliably storing proofs of transactions ranging from authenticity and provenance, to condition reports.

     

    Unfortunately, blockchain technology has been problematic from a sustainability and energy-consumption perspective, and urgent attempts have been underway to fix this. 

     

    If you’re interested in choosing a blockchain app, ask the developers which blockchain it uses. 




     

    What are NFTs? 

    The blockchain also forms a critical backbone of another fast-evolving trend, NFTs (Non-fungible tokens), most of which live on the Ethereum blockchain (one of the less environmentally friendly ones). 

     

    In the form of “crypto collectibles,” NFTs, which are generally traded on specific platforms, can be considered at once a new form of medium or “artwork type,” a rights-management mechanism, and digital assets in and of themselves (though the assets may be stored elsewhere) that revolve around a value model based on verifiable scarcity. 

     

    NFTs offer new and interesting opportunities to artists, especially those who work mainly in the digital space, not least because artist resale rights are baked into the technology. 

     

    If you decide to explore NFTs, GCC advice is to proceed cautiously and follow the steps outlined below. 

     

     


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    GCC Guidance on NFTs 


    1. Think carefully about the risks 

    In addition to their climate impacts, NFTs have come under fire for other reasons too. There are numerous instances of people attaching NFTs to images that they did not create, and the market seems to be dominated by a few inside players. There is also concern around turbulent prices and the possibility that NFTs may be a fashionable bubble that will eventually burst.

     

    The fact that NFTs aren’t actually a solid proof of ownership, but simply a kind of “digital certificate” that only has the value that people choose to associate with it, means that they carry no guarantee of being worth anything in the long term. Selling NFTs therefore comes with a reputational risk: if the market eventually crashes, then the people who sold NFTs could well come under fire for helping to inflate it. Even attempts to use NFTs to fund good causes have been known to spectacularly backfire, as with WWF’s “conservation NFTs” earlier this year. This was partly linked to the climate impact of the specific NFTs that WWF was selling, but people were also upset that the charity was helping to legitimise and promote NFTs in general, encouraging the growth of a market that has a huge environmental impact.  

    2. If you do go ahead with NFTs, then choose a low-carbon blockchain

    Many popular cryptoart marketplaces create their NFTs using the Ethereum blockchain. Ethereum is built on a highly energy-intensive blockchain methodology called “proof of work”, which requires huge numbers of computer processors to be whirring away all over the world, burning up large amounts of energy and fossil fuels. The global energy consumption of Ethereum is currently estimated at around 100 Terawatt hours per year (ie larger than the electricity use of most countries), producing over 50 million tonnes of CO2e. This gives every transaction on the Ethereum blockchain a carbon footprint similar to a domestic UK flight.

     

    Fortunately, lower-carbon alternatives are available. “Proof-of-stake” blockchains use a different methodology that requires only a tiny amount of energy use per transaction, estimated at around 99% less than Ethereum.

     

    Ethereum say they are planning to move to a lower-energy proof-of-stake blockchain system sometime in 2022, but this has not yet happened. This has prompted growing numbers of artists to turn to alternative low-energy blockchains that already use proof-of-stake, such as Tezos, Cardano and Kusama (based on the Polkadot currency).

     

    To find a digital partner able to create low-carbon NFTs on a proof-of-stake blockchain, check out this useful online list. Possibly the most notable platform for Proof of Stake NFTs also happens to be based in the artist community: Hic et Nunc. 

     

    Hic et Nunc NFTs (HEN) minted on the Tezos blockchain are also sold through other sites, including objkt.com, which seems to be the most high-profile proof-of-stake NFT marketplace.

     

    GCC cannot specifically vouch for any of these sites or marketplaces, but hopefully this gives you some useful starting places.

    3. Include your NFTs in your annual carbon footprint

    Some up-to-date estimates of the carbon footprint of each transaction on the Ethereum blockchain can be seen here. As you can see, each transaction on the Ethereum blockchain is responsible for over 100 kg of CO2e (at the time of writing, the website is currently showing 145 kg per transaction). 

     

    If you’ve already created and/or sold NFTs that were based on Ethereum, you’ll need to include their impact in your annual carbon reporting. We are planning to add NFTs into our online carbon calculator next time we update it, but in the meantime it’s not too difficult to calculate yourself. Add up the number of blockchain transactions that were required to create and sell NFTs in your chosen reporting year, and multiply by 145 to get the approximate carbon footprint in kg (you can divide by 1000 to turn it into tonnes of CO2e). Add this into your carbon footprint for the year.

    4. Remember that offsetting won’t remove the impact of NFTs

    As explained in our online offsetting report, purchasing carbon offsets won’t make the impact of your NFTs disappear. The best option is to make sure that any NFTs you are responsible for are created using a proof-of-stake blockchain to minimise their impact on the climate. However, if you have sold any Ethereum-based NFTs and wish to take responsibility for their emissions, you could donate to one of our recommended Strategic Climate Funds. This won’t make your NFT emissions vanish, but it will support meaningful and strategic action to help the world halve its emissions by the urgent 2030 deadline.

     

     


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    Effective Actions 

    • Understand and evaluate the environmental impact of your blockchain activities. 
    • Opt for low-carbon alternatives that use “proof-of-stake” blockchains (which use a different methodology that requires only a tiny amount of energy use per transaction).
    • If you do decide to work with NFTs, make sure you include them in your carbon calculations as this will likely make up a significant part of your carbon footprint. To put it into context, every transaction on the Ethereum blockchain produces a carbon footprint similar to a domestic UK flight.

     

     


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    Further Reading

      
    NFTs: The Environmental Cost
    Ethereum Energy Consumption Index
    Measuring the Climate Change Impact of Blockchain and Non-Fungible Tokens (NFTs)