How Artists Can Lead the “Green Chain” Revolution

This is the Earth Day 2022 edition of Dequency’s weekly newsletter. We’ve been on a little bit of a hiatus, but hopping back into the Friday update cadence as we get closer to the release of v1 of our platform (aiming to launch on testnet in about a month!). If you haven’t checked out our open beta on mainnet, please do! Alright, now for your (ir)regularly scheduled programming…

Artists all over the world are beginning to realize the value of NFTs when it comes to building community around their art directly and monetizing their work. From web3 native digital artists to IRL art showing up on-chain, we’re watching a tectonic shift in the nature of how we engage with, and value, art.

Image from Aorist.art

However, as NFTs evolved from a niche, nerdy interest to headline-generating cultural phenomenon, another conversation was popping up in parallel: wait, are these jpegs of monkeys bad for the environment?

Cute lil’ kitty or environmental disaster? YOU DECIDE. (source)

For artists and collectors alike, the carbon impact of blockchain transactions, such as minting an NFT, has become a material concern (if not simply a point of conversation). Can we, in good consciousness, embrace a technology that’s supposedly better for artists while simultaneously being disastrously energy-intensive? How could this on-chain art be “the future” while simultaneously putting our earth’s future in peril? How does one even measure those tradeoffs (and who bears the cost of them)?

In order to evaluate the ills of swappin’ jpegs on your carbon footprint (and more broadly, the polar icecaps), let’s look at the basics of energy consumption re: blockchain transactions.

Proof of Work

When transacting on the blockchain, our carbon footprint can quickly become a major issue depending on the particulars of the chain you’re interacting with.

A little “how does this crypto thing even work” refresher: Proof-of-work (PoW) is a mechanism that requires complex equations to be solved to provide new blocks on the chain, and each transaction requires a block to be cryptographically verified. To solve these complex algorithms, miners need to have specialized computers that often are relatively energy-intensive.

Blockchains such as Bitcoin and Ethereum operate on the PoW systems, meaning the cost of validating a block is energetically high in exchange for its cryptographic security… but how high, exactly? As of April 2022, the carbon footprint of a single transaction on Bitcoin is about 1185.15 kg of C02, equivalent to **2,626,704** VISA transactions or 197,525 hours of watching Youtube. A single transaction on Ethereum is about 148.68 kg of C02, equal to the carbon footprint of **329,526** VISA transactions or 24,780 hours of watching Youtube (coincidentally, the exact amount of YouTube I had to watch to finally understand how PoW works).

With the majority of NFTs residing on the Ethereum blockchain (most commonly as ERC-721 tokens), this type of energy consumption is a consideration for artists who want to mint their work on-chain. (Note: Ethereum 2.0 entails the migration to a PoS consensus mechanism… but I’ll believe it when I see it. Your move, Vitalik.)

Do artists care about the environmental costs?

The reality is: despite the world-ending downsides, more and more artists are taking the leap into web3, and the NFT economy is expanding rapidly to reflect that. A report earlier this year from Emergen Research reports the NFT market size worldwide trending towards $3.5 trillion by 2030 (from a paltry $340 million in 2020). If you’re interested in minting NFTs as a way to earn a living from your art, you’re certainly not alone.

Still, the question remains: in a world where most individuals are implicated in the consumption of an energy-intensive internet ecosystem, how seriously must artists take these concerns? As more artists are finally able to realize sustainable income from their work, are they obligated to give it up because of the deleterious nature of blockchain transactions w/ ETH?

The art community appears to be torn between sovereignty and communalism; artist and computer scientist Memo Akten was able to raise awareness through sharing research on the energy consumption of minting an NFT on the Ethereum blockchain, yet his work was subject to harassment and ultimately he took the site down (cryptoart.wtf).

Enter: Proof of Stake

Luckily, artists don’t need to decide between earning a living and saving the polar bears; PoS provides a way to transact cryptographically at a dramatically lower energy cost. The main goal of the PoS system is to reduce the environmental concerns around blockchain technology by eliminating the need for a global network of computers to simultaneously solve a complex cryptographic puzzle. (Wish we would have thought of this earlier… but better late than never!)

There’s no need for the entire network to be involved in the transaction validation process, which improves scalability: PoS only requires a laptop or phone (minimum) to provide validation for the new blocks created, whereas the PoW mechanism requires specialized computers that produce heavy computation resulting in the high consumption of energy. The continuous upgrade of hardware and soaring energy costs are eliminated, too (source: EdChain).

There are layer one and layer two solutions that now operate on the PoS, such as Algorand (L1), Solana (L1), Cardano (L1), Polygon (L2), and many more. These chains are not only cryptographically secure, but they’re faster and cheaper. Where PoW is “heavy” by design, emissions from digital asset creation (read: NFTs) on PoS chains are orders of magnitude smaller.

Just totally different scales, here. PoW vs. PoS (Source: Twitter)

In addition to simply being more efficient due to PoS, some chains go the extra mile to ensure that they are carbon negative. Algorand has partnered with Climatetrade to buy carbon credits to offset their carbon footprint further. Solana has further offset their carbon footprint by funding the proper disposal of CFCs used in refrigerants. Coinbase Giving is partnering with Toucan to provide grants for regenerative innovation. In short, the variety of PoS L1s give artists and art collectors a way to realize the benefits of blockchain without the aggressive externalities of the PoW consensus mechanism.

At Dequency, we’re heartened to see the flourishing arts community on our home chain Algorand, where music platforms, galleries, and NFT projects alike have risen up to host and share work on the green blockchain. Going a step further, many of these projects fully embody the ethos of Algorand by donating a portion of proceeds to tree planting projects (Al Goanna), financing climate-forward projects (Aorist), and partnering with environmental non-profits (ZestBloom w/ Project Ark)… just to name a few.

Doing good is contagious — Al Goanna plants a tree for every NFT created.

A Word of Caution

However, as crypto as a whole continues to expand, the net energy impact of all on-chain activity grows regardless. Because of this, it’s important to consider the actual origin of the energy itself (coal mining vs. solar? etc) and advocate at the local level for incentives around more sustainable energy sources.

While the astronomical energy impact of Bitcoin and Ethereum are certainly a target for blockchain naysayers, it’s clear that the future is Proof of Stake… and hopefully, artists can lead the way.

Happy Earth Day!

-Team Dequency

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