The world’s first carbon asset NFT: Does the NFT itself generate carbon emissions?

According to reports, China Carbon Neutral, a Hong Kong-listed company, issued an announcement that on March 23, 2022, the group provided carbon credits under the certified carbon standard as the underlying asset, and used blockchain technology to issue carbon asset NFTs for the first time in the world to support institutions and enterprises. Or individuals purchase carbon asset NFTs through the platform to offset related emissions and achieve carbon neutrality.

The board of directors of the company believes that the carbon asset NFT issued by the group represents a registered digital carbon asset endorsed by a real carbon asset. Through the on-chain write-off, it helps institutions, enterprises and individuals offset their own carbon emissions, and by creating an open and transparent carbon emissions account book, the related transactions can be traced and stored on the chain.

Multi-source records and instant certification of smart contracts can calculate, track and report carbon footprints, helping to build a greener and more sustainable carbon asset financial system. Contribute to the fight against climate change while achieving good business returns.

The world's first carbon asset NFT: Does the NFT itself generate carbon emissions?

In recent years, the application of blockchain has become popular, which has given birth to unlimited business opportunities in the NFT market. However, it is a new investment concept to apply the digital products of NFT to the green economy.

The issuance of carbon asset NFT tokens by China Carbon Neutral can be said to be a perfect combination of blockchain and carbon credit market. Each ton of carbon assets is marked with a unique NFT digital identity certification, which cannot be copied, and holders do not need to Worrying about the loss of carbon assets is extremely safe, which can stimulate companies to buy and sell carbon asset NFTs on the platform, and the circulation will also increase.

Suddenly, the researcher has a new question. Since carbon assets have been made into NFTs, will NFTs themselves produce carbon emissions?

Will NFTs also bring about carbon emissions?

Although NFT is a digital certificate based on a blockchain technology contract, the carbon emissions it brings cannot be underestimated.

There are also many voices questioning that NFTs are not “green”.

Digital artist and engineer Memo Atken pointed out: “Any NFT is much more expensive than a normal Ethereum exchange because NFTs are minted and exchanged multiple times on the blockchain.”

The New York Times criticized: “Creating an ordinary NFT will generate very large carbon emissions, which will bring more than 200 kilograms of carbon, equivalent to the carbon footprint of an ordinary American gasoline-powered car for 500 miles. These emissions will cause the planet to warm.”

The NFT Club claims that the process of minting NFTs alone generates 83 kilograms of carbon. Unfortunately, emissions don’t end with minting, 23kg of carbon is generated every time someone bids for an NFT, 51kg of carbon per NFT sale, and 30kg of carbon per NFT transfer. Additionally, a secondary NFT sale would generate an additional 81kg of carbon, which would require 1.35 trees to offset.

French artist Joanie Lemercier turned to computational engineers to estimate the carbon footprint of his artistic practice and posted the results on a website he created. Le Messier noted on the site: “In the past two years, I have published six artworks (videos), of which every 10 seconds of video encryption has proven to consume more power than the entire studio has done in the past two years. Sum of power consumption”.

Through these data, the environmental cost of NFT seems to be a bit large.

Although some people hold different views on this, the NFT trading platform Super Rare once published an article titled “No, Crypto Artists Will Not Hurt the Earth”, stating:

A blockchain like Ethereum is more like an entire train, and specific transactions are like seats on the train. The train will run non-stop regardless of whether there are passengers and how many, so increasing the trade does not increase the carbon emissions of this train.

The statement that NFTs generate a lot of carbon emissions may be alarmist, but it is undeniable that NFTs will still generate carbon emissions during the casting process.

How to reduce the carbon emissions of NFTs

In response to this situation, some experts have proposed the following countermeasures.

1. Establish a consensus mechanism with lower energy consumption

According to Ultra sound money statistics, NFT consumes a huge amount of resources. OpenSea burned 369 ETH within 24 hours. The culprit is the POW consensus algorithm used by the Ethereum network, which consumes a lot of energy.

In fact, most NFT mining and exchange is carried out on the POW-based blockchain, which requires a lot of energy to mint and exchange, which is not sustainable. In the long run, NFTs with lower fuel bills and a smaller carbon footprint will definitely gain a foothold.

2. Optimize the consensus mechanism formed

Due to the large ecology, the game of so many multi-phase nodes in Ethereum makes the switching of the consensus mechanism not so easy. In fact, the most direct and effective way to reach a consensus mechanism to achieve green NFT is to use green new energy to replace the high-emission electricity obtained by burning fossil energy.

In terms of green energy, more than half of the EU’s electricity sources are clean energy sources. If the main verification work of each link of NFT minting and exchange can be undertaken in the euro area, then carbon emissions can be reduced in this way.

3. Introducing green investments into the crypto market

The entry of green capital into the blockchain market will help NFT projects operate in a “low carbon” or even “zero carbon” manner.

It is worth mentioning that investment institutions or creditors usually have strict requirements on carbon emissions in each link in the process of creating NFTs. For example, carbon emissions metrics must be indicated in minting, issuance and auction links.

Not only that, but the project also provides a traceable carbon footprint and regularly discloses carbon measurements.

That is to say, in addition to achieving financial performance, NFT projects also need to meet green indicators, otherwise they need to accept the capital withdrawal of investors or be regarded as a default of creditor’s rights.

In the context of more and more attention to carbon neutrality, environmental protection has become a major issue that various industries have to face for survival and development, which also provides new opportunities for the blockchain industry.

Carbon asset NFTs have taken the lead in reducing carbon emissions and achieving carbon neutrality. As for the new direction of future development, it remains to be explored.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-worlds-first-carbon-asset-nft-does-the-nft-itself-generate-carbon-emissions/
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