Story at a glance
- NFTs, or nonfungible tokens, are digital assets whose sole rights can be purchased digitally thanks to cryptocurrency blockchains like Ethereum.
- These digital assets can take the form of anything from a tweet to a song to a picture, and they’ve racked up a lot of controversy thanks to the toll they take on the environment.
- New platforms like Aerial have popped up in response, allowing people to quantify the environmental effects of NFTs and subsequently pay money for carbon offsets.
Earlier this year the art world was taken by storm as nonfungible tokens, or NFTs, made their digital appearance in the marketplace. Anyone who has been following news of these controversial works knows a few things to be true, namely that their creation comes at a high environmental cost, and that they can be sold for sky-high monetary costs. Last month an NFT by the artist Mike Winkelmann, also known as Beeple, sold at a record-breaking $69.3 million, the third-highest price achieved by a living artist.
While the future of NFTs remains unclear, what has become increasingly obvious is the need to find more sustainable alternatives to the way these high value art pieces are encrypted. Most creators rely on the cryptocurrency Ethereum to “mint” them, meaning the amount of carbon dioxide emissions released with each drop is equal to way more than a drop in the bucket.
According to an estimate from the end of last month, the popular crypto art platform OpenSea had emitted about 67.8 million kilograms of carbon since launch, and a recent NFT drop by musical artist The Weeknd emitted somewhere in the range of 86,000 kilograms of carbon. That’s roughly equal to the amount of energy used to fly from New York to London 86 times, according to online platform Aerial.
Focused on helping people quantify carbon emissions, Aerial launched late last year a tool that allowed users to track their carbon footprint based on their daily transportation and travel. According to co-founder Andreas Homer, they had already been thinking of integrating crypto when the NFT boom hit.
“It led us down a path of really prioritizing that work,” said Homer. “I think our main goal is to quantify the footprint, but also give people ways to mitigate their impact. We really want to shed light on the environmental consequences of blockchain transactions, and give people those ways to mitigate them through carbon offsets.”
Calculating carbon emissions
Homer says that there are several factors involved in quantifying the carbon footprint of an NFT — namely how many unique editions are made available for purchase and just how popular they are. The more popular an NFT is, and the more hype that piece might have, the more bids and resales take place as the digital art is traded around, each step requiring more Ethereum mining. When that Ethereum is mined in places around the world that still heavily rely on fossil fuels like coal, the environmental impact is only worsened.
“For artists, particularly ones that have a bigger platform and a bigger voice, we want to give them the ability to understand where things are right now, what they can do, and also, going forward, the types of innovations and changes that need to happen to really make blockchain and NFTs more sustainable,” Homer said.
The way it works is quite simple from a user’s perspective: Those interested in purchasing carbon offsets are able to paste in the collection address of an NFT drop, and they are provided with an estimate of that work’s carbon footprint. The platform then generates carbon credits attached to a dollar amount that can be paid to offset the NFT purchase. Users are able to pay using a credit card, or Ethereum, of course.
Homer says that progress in advancing the sustainability in blockchain technology has been a slow, uphill battle, as the Ethereum community attempts to make the move to Ethereum 2.0, which would transition the way an NFT is encrypted from a proof of work consensus mechanism to a proof of stake consensus mechanism, “which is far more efficient and requires less computing power, and then in turn requires less energy consumption and creates less emissions.”
In the meantime, says Homer, he and his team decided to draw upon their skills in emissions computation to provide artists and buyers with a way to offset their carbon footprints using Aerial. So far, they’ve worked in direct partnership with big names like DJ and producer Calvin Harris as well as street artist Mr. Brainwash, and they hope to continue to draw influential artists to the platform.
How do carbon offsets work
For many large companies trying to get more in line with a sustainable future (or perhaps at least a greener image), carbon offsets have been the method du jour. Jetblue announced earlier this year that it will offset its 15 billion to 17 billion pounds of greenhouse gas emissions by purchasing carbon credits, and everyone from cement manufacturers and tech giants like Google and Amazon have been following suit.
“The whole purpose of offsets,” University of California at Berkeley climate policy researcher Barbara Haya told The Washington Post, “is to create a way for an individual or a company or a university to pay someone else to reduce emissions to cover emissions that they can’t reduce themselves.”
When a company invests in carbon offsets, it is essentially funding projects somewhere in the world to reduce carbon greenhouse gas emissions, whether that means planting trees or building solar panels.
The catch is that since these offsets are being purchased voluntarily, as opposed to government mandated offsets, the amount of accountability can vary wildly from company to company. Many sellers don’t disclose exactly what your offset purchase is funding. Experts say it’s not only important that you’re able to examine the projects in their portfolio, but that the projects seem permanent and enforceable.
In the case of Aerial, three organizations are displayed prominently on their page, two of which the platform has been working with since its soft launch. Both verified forest conservation projects, Homer says that 80 percent of the money coming into the platform is allocated to preserving wild land in California and Alaska. The remaining 20 percent goes to a company called Charm Industrial, which is contracted by Microsoft and Stripe to convert waste biomass into carbon-rich bio-oil.
“They turn that biomass waste, which would normally just decompose or be burned and create billions of tons of carbon emissions every year, into this harmless bio oil, and they inject it deep underground in Oklahoma,” Homer said. “They’re extremely meticulous in the way they operate.”
While not a permanent solution to the issue of blockchain-related carbon emissions, proponents of offsetting argue that the system, while imperfect, gives companies (and individuals) the opportunity to quantify and attempt to address their impact on the environment.
“Offsets aren’t a perfect solution. But they are an immediate way to take action and mitigate some of these effects.”
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Published on Apr 20,2021