By Kim Callaghan for Award Pool
Carbon offset… sounds a little… boring. But it`s an important consideration when creating NFTs. Why? Because each time we create an NFT, we can use huge amounts of energy. Which results in greenhouse emissions created by the hydro source used to mine the NFT.
What?! Okay, here’s how it works. Most NFTs are currently minted on Bitcoin and Ethereum blockchains, the two biggies of the cryptocurrency world. To validate their tokens and coins, these chains use proof of work problems. These problems must be solved by miners (the people who create and validate crypto coins and tokens) in order to add a new transaction to the blockchain.
These complex proof-of-work problems use a LOT of computer energy. Recent studies by the Digiconomist found that a single Ethereum transaction can use as much energy as a US household consumes in 2.5 days. The energy source creating power where the miner lives can also impact the level of greenhouse gases produced by a transaction. In coal-powered areas, greenhouse gas production is much greater than in areas using hydroelectricity.
So, each time an NFT is created, it can produce a huge amount of greenhouse gasses. The solution? Using blockchains that validate their tokens differently (and use less energy) and using carbon credits to offset greenhouse gas emissions.
Carbon offsets are environmental programs that allow companies and individuals to neutralize their carbon footprint. These programs invest in projects that reduce greenhouse gases. Essentially, buying carbon offsets offers a way for companies to balance the number of carbon emissions they produce with the amount they potentially reduce. This is where the term ‘carbon neutral’ comes in. If a company reduces the number of carbon emissions by the same number of carbon offsets purchased, they can call themselves carbon neutral.
Carbon offset projects are often designed to reduce future emissions in developing countries. This could be by projects that distribute low-energy use lightbulbs to reduce coal-powered electricity consumption. Or a project could distribute efficient cookstoves that reduce household emissions. And, of course, tree planting and forest conservation also help reduce greenhouse gases.
Many of these projects also have added social benefits in developing countries. Not only will a low-energy lightbulb reduce emissions, but it will also decrease the electricity bill of that household. This allows people to use that money to purchase other necessities and can help achieve a better standard of living.
Creating NFTs can also create a lot of carbon emissions. By investing in carbon offset programs, NFT creators can help to reduce and neutralize the emissions they create. Depending on the project they invest in, offset projects can also have many social and economic benefits in the project area. With the right leadership and investment, NFT creators can actually lead the way in making NFTs carbon-neutral and environmentally responsible.
Kimberly Callaghan 