Do you remember NFTs?
Do you remember how they were consistently, credibly called out as an obvious con?
Do you remember the stories about how much energy was going into powering the computers running that con?
Pepperidge farm remembers, and so do I.
An article went around not long ago, about the fact that NFTs are mostly completely worthless now (as though they weren’t worthless from day one), and it got me thinking.
I like the idea of a society in which people can try things just to see if it’ll work, and I think we should be focusing more on increasing carbon-free energy production than on restricting people’s ability to use energy. I also think that that only goes so far. I want more nuclear power, for example, but I’m not on board with people building reactors in their back yards, and I’m not on board with turning an increase in nuclear power plants into a speculative bubble.
And I’m not on board with allowing vast amounts of resources to go into powering something like NFTs, simply because there’s a lot of money involved. The technology involved is interesting, and I’m sure it has great uses, but in my inexpert opinion, the value of crypto-stuff in general has been greatly overblown, and NFTs seemed a thousand times worse. A lot of people with a lot of money pushed really hard to make that bubble happen, and I’m sure they made a lot of money from it. I’m sure a small number of lucky working people also made fortunes, but as is usual in capitalism, I think that was a small minority.
I don’t know how many people lost money from NFTs specifically, or how many were convinced to invest cash they couldn’t afford to lose, but given the state crypto overall, I’m willing to bet it was a lot.
At the start of 2022, the Super Bowl featured celebrities like Tom Brady, Larry David and Matt Damon in commercials for crypto companies. Logos for crypto companies like FTX could be seen plastered on multiple sports arenas and a new wave of crypto influencers emerged, garnering hundreds of thousands of followers. Cryptocurrency was everywhere.
It was supposed to be an alternative to traditional finance.
Instead of exchanging money through a third party, like a bank, cryptocurrency allows users to transfer digital currency directly. However, unlike traditional forms of currency such as the U.S. dollar, the government does not insure deposits and federal agencies have taken limited steps to regulate the crypto industry.
But the major crash of the crypto market last year has brought headaches, fear and anger among the millions of people around the world who invested their savings and are left wondering whether they’ll ever see their money again.
Curt Dell, a father of three from California, told ABC News’ Rebecca Jarvis that he’s lost over $200,000 in Bitcoin after the digital crypto lending company Celsius went bankrupt last year.
“It robbed [my family] of so much potential,” said Dell, a California resident who works in sales. “It’s such a bad situation.”
Sam Bankman-Fried is currently on trial for his alleged crimes, but I have a sneaking suspicion that as with Madoff before him, his punishment will distract from the vast majority of those whose actions created the bubble.
There are those who argue that bubbles, including the crypto bubble, are actually good things, because they generally follow new technology, which is later adopted. I think there may be a good point in there somewhere, but the people who make such arguments tend to ignore or dismiss the people harmed by those bubbles, and that’s just the surface.
I’ll admit that I find it a little hard to feel too much sympathy for someone who had $200,000 to invest in such an obvious con. If Dell had that money lying around, I think he and his family will be OK for its loss. A lot of other people, who invested far less than that, will probably suffer more for it, but made the investment because they felt it was their one shot to escape poverty in a rigged system.
Maybe, in a world with a solid social safety net, and no climate crisis, it would make sense to allow bubbles like this to just happen, both as a way to test the bounds of a technology or concept, and as a way to root out scammers, and limit their ability to scam people. Unfortunately, we live in a world where losing money to a scam can be devastating, and the bubble in question actively added to the climate crisis.
According to artist Memo Akten, minting an Ethereum-based NFT alone requires 142 kWh of energy. This is the equivalent of about 100,000 Visa transactions, said Dexter Baño Jr., an advocate for environmental protection and technological advancements. To further illustrate how huge that figure is, he noted that in 2019, American households only used an average of 30 kWh of energy per day.
“This means that you can power a house in the United States for 4.7 days with the energy being used to mint an NFT,” he said.
Now, if you’re in the mood for some math:
“Based on data from the Energy Information Administration, there are 0.85 pounds of CO2 (carbon dioxide) released into the air per kWh of electrical energy used. Multiplying this by the amount of energy spent on each mint transaction on Ethereum, that snowballs to 120.7 pounds of CO2 for every NFT creation. This is 6.16 times the CO2 output of burning one gallon of gasoline,” Baño said.
It’s important to note that this only covers the creation of one NFT. The process of buying and selling each NFT involves more transactions that need to be verified—mined—and therefore even more energy that goes into all that extra computer activity.
“Since NFTs are getting mainstream, more people are transacting on Ethereum. As long as proof-of-work still exists in that chain, the environmental impact is still high,” said Angeline Viray, who trades and invests in cryptocurrencies and NFTs.
This isn’t good. To me, it feels like the way this bubble played out demonstrates pretty clearly that we are nowhere close to taking global warming seriously, as a society.
We have to use fossil fuels to replace fossil fuels, and using energy for bullshit like this is, in my view, unacceptable. It’s also absolutely going to keep happening, in all sorts of ways, for as long as we are governed by the current system.
I don’t really have a policy prescription here, other than to say that we ought to be making climate action the central focus of our economy, to the same degree that we currently center greed. There’s something broken when waste and fraud at that scale is simply… the way things work.