Are NFTs bad for the environment?
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Are NFTs bad for the environment?

Published Wed Apr 20 2022

Growth in the NFT market has been indisputably explosive, with trading volumes increasing from $74 million at the beginning of 2021 to $25 billion by the end of the year. That growth has only accelerated since, with NFT trading volumes hitting $12 billion in Q1 2022 alone.

But every transaction has a cost — and it’s not just floor values and gas fees. The vast majority of NFTs are on the Ethereum blockchain, which still runs on the energy-intensive proof-of-work operating method (until The Merge occurs, which will transition Ethereum to proof-of-stake.)

The climate impact of NFTs

Minting a single NFT using the proof-of-work method requires the same amount of electricity as an average American household over almost nine days. An equal amount of energy is required when that same NFT is purchased and when it is sold. In other words, a single NFT transaction on Ethereum uses the same amount of energy as roughly 331,056 Visa transactions or 24,895 hours of watching YouTube.

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So is it possible to be climate-conscious and participate in this exciting emerging market? The answer is yes. In fact, KlimaDAO can help make your NFT transactions an act of climate activism.

Flipping the script: NFTs as climate activism

Since its inception in October 2021, KlimaDAO has created an on-chain market for tokenized carbon offsets. This makes the purchase of carbon offsets accessible to anyone with a crypto wallet. Further, KlimaDAO recently launched its offsetting tool, allowing these tokenized offsets to be “burned” on chain. The individual who performs the offset has confidence in knowing the carbon emitted due to the transaction’s energy consumption has been counterbalanced with an activity that reduces greenhouse gasses. Since KlimaDAO lives on the proof-of-stake Polygon blockchain, its activity consumes 99.9% less energy than transactions on Ethereum.

While neutralizing the impact of one’s NFT-related energy consumption is a great first step, web3 enables some far more exciting possibilities to go beyond carbon neutrality to climate positivity. Several NFT artists have leveraged KlimaDAO in creative ways to make a commitment to the planet through their art.

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A commitment signed with a smart contract

A powerful and poetic way to make your NFT collection climate positive is to embed staked KLIMA into the smart contract.

New Zealand-based Digital Charity Art partnered with KlimaDAO on their most recent collection of NFTs, which act as a time capsule, locking up and compounding carbon offsets over time while generating cash flow for ocean conservation. When an NFT was minted, the buyer could burn the NFT, claiming the underlying KLIMA along with 70% of staking rewards. Over the course of the year, the other 30% of rewards are claimed by DCA and directed to ocean conservation charities (World for Wildlife NZ, Sea Shepherd NZ, See Turtles, Marine Megafauna Foundation, and Oceanic Society).

This tactic was first introduced by artist SVN, who created the original carbon-compounding artwork. Minted on December 4, 2021 with one staked KLIMA permanently embedded in its smart contract, it has since compounded 10.328 KLIMA, equaling 31.5 carbon tonnes locked away in the treasury. The contract is designed so the KLIMA can never be removed or unstaked.

A love letter to the planet

Recently, KlimaDAO launched its “Love Letter to the Planet” campaign, allowing individuals and organizations to offset emissions on chain while leaving a 280-character message in the smart contract. Several NFT artists have participated in this campaign to make their commitment public:

  • Halls of Olympia, an immersive blockchain sporting arena, offset three times their NFT mint emissions with 100 tonnes retired.
  • Stadius, a platform that connects brands with their fans through unique NFTs, kicked off their commitment to the planet by retiring 75 tonnes.
  • NFT collective H1VE offset 88 tonnes of CO2, covering roughly one third of their estimated launch footprint. They pledge to offset the remainder going forward to remain carbon neutral.
  • Gm.studio is a collective of NFT artists. They published their love letter to the planet, retiring 350 tonnes of CO2 — more than five times their footprint.
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Participate in the movement

If you are an NFT artist or collector and want to align your actions with your values, you can start by calculating the emissions of your Ethereum address at carbon.fyi. You can then offset your emissions or go carbon negative by writing your own Love Letter to the Planet. For more resources, check out this guide on how to create climate-positive NFTs.

If you are interested in getting involved with KlimaDAO, join us on Discord and follow us on Twitter.


Disclaimer:

The information provided in this blog post pertaining to KlimaDAO (“KlimaDAO”), its crypto-assets, business assets, strategy, and operations, is for general informational purposes only and is not a formal offer to sell or a solicitation of an offer to buy any securities, options, futures, or other derivatives related to securities in any jurisdiction and its content is not prescribed by securities laws. Information contained in this blog post should not be relied upon as advice to buy or sell or hold such securities or as an offer to sell such securities. This blog post does not take into account nor does it provide any tax, legal or investment advice or opinion regarding the specific investment objectives or financial situation of any person. KlimaDAO and its agents, advisors, directors, officers, employees and shareholders make no representation or warranties, expressed or implied, as to the accuracy of such information and KlimaDAO expressly disclaims any and all liability that may be based on such information or errors or omissions thereof. KlimaDAO reserves the right to amend or replace the information contained herein, in part or entirely, at any time, and undertakes no obligation to provide the recipient with access to the amended information or to notify the recipient thereof. The information contained in this blog post supersedes any prior blog post or conversation concerning the same, similar or related information. Any information, representations or statements not contained herein shall not be relied upon for any purpose. Neither KlimaDAO nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person resulting from the use of the information in this blog post by you or any of your representatives or for omissions from the information in this blog post. Additionally, KlimaDAO undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed in this blog post.