White House to NFT Space: Make Minting Greener
The Alpha:
- A Thursday report published by the White House on Thursday detailed a list of steps all blockchains can take to become more environmentally sustainable, directly impacting the NFT space.
- The report argues that blockchains operating under a proof-of-work consensus mechanism – namely Bitcoin and Ethereum – are particularly energy-intensive.
- With Ethereum accounting for up to “20% to 39%” of global energy use generated by blockchains, the upcoming Ethereum merger could help achieve the sharp reduction in blockchain energy consumption the White House is calling for as it transitions to a proof of – consensus mechanism for the effort.
- The report follows the March issuance of Executive Order 14067, which called for the responsible development of this growing technology sector, referred to here as the digital asset industry.
Why it matters
It looks like everyone is excited about the upcoming Ethereum merger. Even the White House. With environmental concerns leading the list of arguments against further development of blockchain technology, the upcoming shift of the de-facto NFT blockchain to a proof-of-stake consensus mechanism to verify transactions recorded on it appears to solve one of the most frequently discussed problems. – along with encouragement towards future growth. It is generally accepted that blockchains operating under this consensus mechanism pose a “significantly lower” risk when scaled up compared to their proof-of-work counterparts, according to the new White House report.
For now, NFTs are far from an exception to the potential environmental impact of blockchain technology. As described in an article by computational artist Memo Akten, each NFT transaction on Ethereum-powered platforms consumes the equivalent amount of energy as a multi-hour flight. That includes minting, which reportedly uses the same amount of energy as a “1-2 hour flight,” Akten said. Of course, everything will change after The Merge.
“Each consensus mechanism has strengths and weaknesses. […] Responsible development of digital assets will encourage consensus mechanisms that minimize energy use and environmental impacts while maximizing consumer benefits, the White House said.
What will be next
Although things are looking up for Ethereum, Bitcoin needs to follow suit by adopting a more environmentally friendly consensus mechanism. As detailed in the White House report, the United States is currently the world’s leading force in Bitcoin mining — a position that could become environmentally sustainable down the road. At worst, the White House could follow the initiatives of countries like China to officially ban all crypto — and in turn, NFTs. However, it should be noted that the CCP’s crypto ban has hardly slowed down crypto mining in the country.
Remember that an outright ban is an absolute worst case scenario. All things considered, this report can be seen as a gentle reminder from the White House to keep sustainability in mind as blockchain technology continues to become mainstream. As the March Executive Order noted, “We must reinforce America’s leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets,” President Biden said. “The United States has an interest in ensuring that it remains at the forefront of the responsible development and design of digital assets and the technology that underpins new forms of payment […], in particular by setting standards that promote: democratic values; the rule of law; privacy; protection of consumers, investors and businesses; and interoperability with digital platforms, legacy architecture and international payment systems.”
