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After The Merge, Ethereum NFTs will be environmentally friendly

After The Merge, Ethereum NFTs will be environmentally friendly

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After years of delay, Ethereum is set to switch to a proof-of-stake consensus mechanism this month, reducing the energy consumption needed to run the blockchain.

This has a big impact on NFTs, which are primarily traded on Ethereum and are somewhat highlighted due to their perceived environmental impact. This reduced environmental impact can help improve the reputation of Ethereum-based NFT networks among gamers, content creators, environmentalists, and others outside of the crypto space – and can spur a new era of NFT adoption.

“Ethereum electricity demand, [currently] The size of a developed country like Portugal could mostly disappear overnight,” says Alex de Vries of Digiconomist, a platform that tracks the energy consumption and carbon emissions of Ethereum and Bitcoin. “Since we are in the middle of both an energy crisis and a climate emergency, this would be a huge step towards a more sustainable development of Ethereum.”

Proof of Stake replaces the intensive energy required for miners to solve cryptographic tasks by allowing those running the network to stake large amounts of cryptocurrency. Ethereum only consumes energy from validators (replacing miners) using their computers – without large sets of mining machines – and this reduces Ethereum’s energy consumption by 99.5%.

Ethereum is not the only blockchain that supports NFTs, but it contains by far the largest number of NFTs. Ethereum accounts for over 80% of all NFTs, while proof-of-stake chain Solana held up to 12% last year, according to The Block’s Data Dashboard.

Let’s get rid of one of the biggest criticisms of NFT

The main criticism against the adoption of NFTs has pointed to Ethereum’s environmental impact, and this criticism has even led to the scrapping of some projects.

In December 2021, Ukrainian indie game developer GSC Game World pulled the upcoming game game which was supposed to have NFT gaming assets. Even NFT projects that were not based on Ethereum, such as the polygon based project from the UK branch. World Wildlife Fundwas pulled in part because people didn’t like it being tied to Ethereum.

Ethereum’s merger can now bring more people into NFTs, especially those who are hesitant to participate due to Ethereum’s environmental impact, said Damien Schuster, founder of Offsetra, a carbon offsetting platform.

“I think a lot of artists and companies were afraid to use Ethereum because of that [environmental] narratives that are now coming into the space,” he said. “It reduces the pressure or push that they might get from communities or investors.”

But while NFTs are more efficient in terms of transaction speed and environmental impact, they may have to reconcile their past carbon emissions, Schuster said. Ethereum emissions surged during the NFT profile picture mania in 2021 and peaked. 8.1 megatons of carbon dioxide emissions per year.

“There are already people who have offset a lot of their own personal emissions. We work with ArtBlocks, a large NFT company, they have offset all their emissions through us. They’re still thinking about ways to help other projects” that offset their past emissions, Schuster said.

How much energy is Ethereum currently using?

Since its inception, Ethereum has used a proof of work system that burns large amounts of energy to prevent the distributed ledger from being cheated. Although energy use is tied to running the blockchain and not directly making transactions, many critics argue that they are effectively linked (since the purpose of keeping the blockchain running is to process transactions).

As a result, we can get a rough idea of ​​the energy cost of running the Ethereum blockchain in its current system by taking the total energy cost of the blockchain and dividing it by the number of transactions on the chain. It’s worth noting that this isn’t a complete analysis, as it excludes transactions made to tiers above Ethereum, such as Arbitrum, Optimism, zkSync, and StarkNet, and it may be difficult to account for the amount of renewable energy used by miners.

During the last year, the number of transactions made in Ethereum was 428 million Messer, while Ethereum uses about 112 terawatt hours (TWh) of energy per year. The average Ethereum transaction therefore consumes 261.7 kilowatt hours (KWh) of energy. This equates to 0.113 tons of CO2 emissions or driving a gas-powered car 281 miles. UN.

Even this is not a perfect representation, but it gives some idea of ​​the extent of the environmental impact – which will soon be a thing of the past.

© 2022 The Block Crypto, Inc. All rights reserved. This article is for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.

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