The Hidden Cost of NFTs: The Environmental Impact Nobody Talks About


The Hidden Cost of NFTs: The Environmental Impact Nobody Talks About

Non-fungible tokens popularly called NFTs are the latest trend in the art world. What many people don’t realize is the hidden cost of NFTs. The environmental impact these NFTs cause is a topic that few are talking about. This article will be addressing these concerns.

In recent years, especially since 2021, the world has experienced an explosion in digital arts. These digital arts come in unique forms and get their value from their rarity. They are unique and one-of-a-kind pieces of art that are created and verified on a blockchain. The rise of NFTs has been seen as a revolutionary development in the art world, giving artists a new way to monetize their work and fans a new way to collect and invest in art.

The global sales value of non-fungible tokens experienced exponential growth in 2021, reaching a peak of $11 billion. In fact, according to data from Statista, the overall sales of NFTs in the art segment rose to $2.57 billion, rising from about $20 million the previous year. Also, in collectibles, NFTs also experienced a sharp growth and generated nearly $8.6 billion in 2021.

Because of this growth, interests were sparked and people started getting more involved in the phenomenon. However, what people don’t realize is that all is not always as sweet as they seem. These precious NFTs have an environmental impact and a hidden cost no one is talking about. We will be talking about in this article the negative impact and what can be done to mitigate this cost.


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Before we continue, let us do a quick one for those that are not very familiar with NFTs. In the next section, we will give a brief explanation as well as a related link that you can visit to read more on the topic.

What are Non-fungible Tokens (NFTs)?

Non-fungible tokens, or NFTs, are unique digital assets that represent individual ownership of digital art, collectibles, and even real-world items like property and fashion. They are tracked on a blockchain ledger and allow anyone to own a piece of the future.

These tokens are a type of cryptocurrency that enables users to assign unique ownership to digital assets on the blockchain. By tokenizing items, NFTs allow for individual ownership of digital goods and services, as well as physical items such as property and fashion. This has opened up new possibilities for creators, artists, and collectors who can now easily trade one-of-a-kind digital assets.

As we said earlier, Non-fungible tokens (NFTs) are built on blockchain technology using smart contracts to securely store information. By tokenizing an item, each token becomes one-of-a-kind and can be used to track its ownership and transfer ownership through digital ledger technology. Because of its inability to be duplicated, owners can trust that their digital assets remain unique and traceable. Also, they can trust that the authenticity remains secure.

You can read more about Non-fungible tokens, how it works, and what they are used for HERE.

Do NFTs Cause Harm to the Environment?

You may have heard something about NFTs and how they cause a possible negative impact on the environment but you are not sure how. This is what we will be discussing. Well, digital art itself does not cause harm to the environment, rather the way they are produced (minted) impacts negatively the environment.

NFTs can be created with highly intensive energy. When non-fungible tokens are mined using a proof-of-work mechanism, the amount of energy consumed is huge. Since Ethereum completed its Ethereum 2.0 merge, the amount of energy required in mining digital assets has greatly reduced.

The merge shifted Ethereum from a proof-of-work to a proof-of-stake mechanism which was predicted to consume 99.95% less energy than the proof-of-work. Since the upgrade, most NFTs are created using a blockchain that supports the POS. This means that most NFTs minted do not require a vast amount of energy anymore.

The blockchains that still rely on POW, costumes a lot of energy thereby generating lots of carbon. This happens especially when they consume energy from non-renewable sources.

How NFTs are Created

As we said earlier, digital assets cause no environmental harm, however, the way that they are minted can tell the level of environmental impact NFTs have. Let us look at how they are created below:

  • minted on a digital marketplace: An NFT marketplace is a platform that functions as a public blockchain. These are platforms where non-fungible tokens can be displayed, stored, minted, and also traded. The NFT creator uses these marketplaces to upload their NFT information. This information is then tokenized and stored in the blockchain.
  • NFT is listed on the marketplace: After the NFT is successfully minted, it is then listed on the marketplace. It can be listed at a set price or it can be auctioned.
  • Purchase: Blockchain transactions are initiated anytime an NFT is purchased. The transaction is validated by the blockchain network and ownership is transferred to the new owner.

The Environmental Impact and Hidden Cost of NFTs  Nobody Talks About

According to a post on Artalistic, the digital world’s global carbon emissions will account for 9% of greenhouse gas by 2025. The problem with NFTs lies in the excessive energy consumption that the producing blockchain consumes. Let’s see some of the negative impacts below.

1. The Environmental Impact of NFTs

The process of creating an NFT requires a significant amount of energy. This is because each NFT is verified on the blockchain, which is a decentralized ledger that requires a lot of computational power to operate. This process is called “mining,” and it involves solving complex algorithms to verify the authenticity of the NFT.

The mining process requires a lot of electricity, which means that NFTs have a significant carbon footprint. In fact, some estimates suggest that the energy consumption required to create an NFT is equivalent to the energy consumption of an entire household for a month. For example, it is said that the popular “Space Cat” NFT GIF makes use of energy that is equivalent to what an average European citizen uses in two months. Also, data from Statista shows that a single Ethereum transaction consumes more energy than several thousands of VISA card transactions.

2. Climate Change Impact

The environmental impact of NFTs is not just limited to their carbon footprint. The process of mining NFTs also contributes to climate change by increasing the demand for fossil fuels. Fossil fuels are the primary source of energy used to generate electricity, which is required for the mining process.

The increased demand for fossil fuels means that more carbon dioxide is released into the atmosphere, which contributes to global warming. This is a significant concern, given that climate change is already having devastating effects on our planet.

3. The Impact on Natural Resources

Another hidden cost of NFTs is the impact that they have on natural resources. The mining process requires a significant amount of hardware, including powerful computers and graphics cards. These components are made from materials such as aluminum, copper, and gold, which are all finite resources.

The mining process also generates a lot of electronic waste, as old hardware is discarded and replaced with new equipment. This electronic waste is often shipped to developing countries, where it is disposed of in ways that are harmful to the environment and human health.

What Can Be Done Differently to Limit The Environmental Impact of NFTs?

There are several things that can be done to reduce the negative impact NFTs have on the environment. Blockchains that use proof-of-stake for example use a lesser amount of energy for mining. This mitigates the hidden cost of NFTs. A few more ways below:

1. Use Renewable Energy

One of the most effective ways to reduce the carbon footprint of NFTs is to use renewable energy to power the mining process. This includes energy sources such as solar, wind, and hydroelectric power. By using renewable energy, the carbon emissions associated with NFTs can be greatly reduced.

2. Improve Efficiency

Another way to mitigate the environmental impact of NFTs is to improve the efficiency of the mining process. This can be achieved by using more energy-efficient components, such as more efficient graphics cards and processors. Additionally, optimizing the algorithms used in the mining process can also reduce energy consumption.

3. Offset Carbon Emissions

Another solution is to offset the carbon emissions generated by the mining process by investing in carbon offset programs. These programs fund projects that reduce carbon emissions, such as renewable energy and reforestation projects. By offsetting the carbon emissions associated with NFTs, the environmental impact of these digital assets can be greatly reduced.

For example, digital artist Beeple who sold his “Everyday: The First 5000 Days” NFT for $69 million believes he could offset his NFTs’ carbon emission by giving some of his funds to renewable energy and developing technologies that reduce carbon emissions.

4. Use proof-of-stake blockchains

Since Ethereum has been moved to the POS mechanism, most NFTs can now be minted using this blockchain and with reduced energy consumption. Also, purchase non-fungible tokens that are minted on POS blockchains.


The rise of NFTs has brought about a new way to collect and invest in art. However, it’s important to recognize that there is a hidden cost to these digital assets: their environmental impact.

The process of mining NFTs requires a significant amount of energy, which has a significant carbon footprint and contributes to climate change. Additionally, the mining process requires finite resources and generates a lot of electronic waste.

To mitigate the environmental impact of NFTs, we can use renewable energy, improve efficiency, and offset carbon emissions. It’s crucial that we address the hidden cost of NFTs to ensure a sustainable future for our planet.


Q: Are all NFTs bad for the environment?

A: No, not all NFTs are bad for the environment. It depends on the energy source used to power the mining process. NFTs that are verified using renewable energy have a much lower environmental impact than those that use fossil fuels.

Q: Can the environmental impact of NFTs be completely eliminated?

A: It’s unlikely that the environmental impact of NFTs can be completely eliminated. However, steps can be taken to mitigate this impact and reduce the carbon footprint of NFTs

Q: Does proof-of-stake reduce energy consumption

A: Blockchains that work using the proof-of-stake use less energy compared to those of proof-of-work blockchains. So yes, using blockchains that perform using proof-of-stake helps reduce the amount of energy required to mint NFTs.

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