How Ethereum’s Merge Could Fix NFT’s Energy Consumption Problem
Like Ethereum takes its final step towards The Mergewill it change the cryptocurrency consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This improvement can also be the solution to fix non-fungible tokens (NFT) energy issues. Simply put, the Ethereum network is poised to be 99 percent less energy intensive, shifting power from the hands of crypto miners to a fully decentralized mechanism, where no one controls the Ethereum network.
Crypto mining consumes a lot of hash power (computational power) and resources due to the PoW algorithm. It works by having all nodes (devices) solve a cryptographic puzzle. This puzzle is solved by miners and the first to find a solution gets the reward. This has led to a lot of competition and situations where people build larger mining operations.
The more hash power you have, the easier it will be to mine a coin. To further increase their chances of winning, miners gather in what are called mining pools, where they combine their hash power and distribute the rewards evenly, ultimately causing miners to use massive amounts of electricity.
It should be noted that Ethereum is the only token that offered the potential to see blockchain as more than just a method of transferring money. The technology was developed to build use cases, and a popular innovation is NFTs. Emboss (create) a digital resource is popularly done on the Ethereum network and is a natural choice for 95 percent of NFT buyers, according to DappRadar metrics.
This is because Ethereum-based NFTs are very secure, and have a large potential market, which means they sell for a much higher price. Popular NFT marketplaces like OpenSea, Rarible and Nifty gateways are all based on Ethereum’s network.
However, minting NFTs through Ethereum requires intensive energy. For this we need to understand what happens behind the scenes when an NFT is minted or created on an Ethereum blockchain. So if you decide to create an NFT, the transaction now needs to be verified, which is done via validators or in simpler words “crypto miners”. Imagine hundreds of thousands of transactions being verified every minute on Ethereum, this requires thousands of computers working together in a pool to verify each transaction, making the NFT minting process energy intensive.
According to a survey by the NFT Club, possibly NFT for a blockchain uses around 83 kg of CO2. This is not it. Once the NFT is mined, the carbon cost continues for each part of the NFT. Each time a bid is made for an NFT, it costs 23 kg of CO2, each sale of an NFT produces 51 kg of CO2, and each transfer of an NFT produces 30 kg of CO2.
But all this could go if Ethereum switches from PoW to PoS. Instead of competing against each other for a block, PoS uses a process where one miner is randomly selected. This makes PoS a more efficient method. Meanwhile, Ethereum-based NFTs that work on PoS will not only be environmentally friendly, but will also be a cheaper option.
