It has long been known that the industrial revolution kick-started the greenhouse gas emissions that we are today, now some two hundred years later, still learning how to mitigate. We will, for centuries to come be facing the challenges these harmful pollutants have caused to our environment and climate. Some believe we are currently at the beginning of the fourth revolution, Industry 4.0, 4IR, the Imagination Age. However, this time around we don’t have the luxury of time to figure out how to mitigate the harmful effects of this revolution, or in this specific case this technology, we must figure out now how to stop them.
Cryptocurrency has a very poor environmental image. And perhaps rightly so. We’re not about to sit here and try to greenwash things for you. It is without a doubt that the Proof of Work (PoW) mining required to create new currency and confirm transactions uses an exorbitant amount of energy (see here), particularly Bitcoin. And therefore, subsequently, anything based on current technology, such as an NFT, is also going to consume energy.
The reality is we need a solution, and well we need it yesterday. Tech giants and entrepreneurs need to be just as focused on finding a solution as they are on mining new coins or minting new NFTs. And the good news is they are…….well at least some of them. There is starting to be a move away from the original building blocks of blockchains, referred to as the PoW or Proof of Work validation process to PoS or Proof of Stake, and even now there are even newer validation processes slowly coming to light.
There is already progress towards more energy-efficient NFT projects. For example, the WWF UK recently decided to launch their “Non-Fungible Animals” on the Polygon blockchain, a layer 2 scaling solution built on top of Ethereum. Customers could mint their NFTs on Polygon, before bridging their NFT across to be sold on Ethereum based NFT platforms such as OpenSea. For the WWF to mint their entire collection of NFTs on Polygon would have required less energy than is used to make a single hamburger. However, the obvious problem is that this method still encourages the use of the relatively energy-intensive Ethereum blockchain.
More promising however, is the move of Ethereum itself to move to a Proof of Stake (PoS) model. After seven years of R&D, proof-of-stake is finally working on ethereum testnets, and the final launch of “Eth 2.0” is now expected for mid 2022, according to the network’s cofounder Vitalik Buterin.
Do these newer validation processes consume less energy, yes, do they still need to do better, yes. The other catch with this technology is not just the energy consumption, but also the mass amounts of electronic waste that is generated as the technology quickly advances and becomes obsolete. How can we turn that old adage of ‘one man’s trash is another man’s treasure’ into a reality and begin to look at how this waste can be reduced, reused, and recycled.
Cryptocurrency, or blockchain technology, is still really in its infancy, only being created in 2009. Given we are only just over ten years into this new technology and five or six years into this new revolution things are looking promising that we have identified these issues early and are working towards solutions. Are we at the point where we can say we have ‘green’ cryptocurrencies and NFTs, perhaps not, but things are moving in the right direction.