The Merge will result in Ethereum consuming less energy and reducing emissions from its NFTs. This may help to improve the reputation of NFTs. After years of delays, Ethereum will migrate to a proof–of-stake consensus mechanism in this month. This will reduce the amount of energy required to run the blockchain.
This will have a significant impact on NFTs that are traded primarily on Ethereum. NFTs are often singled out because of their environmental impact.
This may improve the image of Ethereum-based NFTs among content creators, gamers, and environmentalists. It could also encourage a new era in NFT adoption.
Alex de Vries, Digiconomist’s platform that tracks Ethereum and Bitcoin energy consumption, and carbon emissions, says, “Ethereum could see its electricity demand shrink to a size comparable to that of Portugal.” This would be a huge step towards making Ethereum more sustainable .” , considering that we are in both an energy crisis as well as a climate emergency.
Proof of stake (PoS) is energy Efficient
Proof of stake replaces the intense energy required for miners to solve cryptographic problems by having the network’s administrators stake large amounts.
Ethereum will consume energy only from validators, who replace miners and run their computers without large sets of mining machines. This will reduce Ethereum’s energy use by 99.5%.
While Ethereum isn’t the only blockchain that supports NFTs (although it has the highest volume), Ethereum is the most popular. According to The Block’s Data Dashboard, Ethereum accounts for more than 80% of all NFTs. Solana, which is a proof-of-stake blockchain, only managed to hold 12%.
NFT adoption has been criticized for its environmental impact. Some projects have been scrapped because of these criticisms.
GSC Game World, a Ukrainian indie developer, pulled a game that was scheduled to use NFT gaming assets in December 2021. Even NFT projects not based on Ethereum such as a Polygon-based project coming from the UK branch, the World Wildlife Fund, were pulled partly because people disliked its association with Ethereum.
Ethereum’s merger can now usher more people into NFTs. This is especially true for those who were hesitant about entering it due to Ethereum’s environmental impact. Damien Schuster, cofounder of Offsetra, stated that
He said that he believes there will be many artists and companies who are afraid to use Ethereum due to the [environmental] narrative. This reduces any pushback or pressure they might receive from investors .”
Schuster said that NFTs may be more efficient in terms transaction speed and environmental impact but they might have to make up for past carbon emissions. The NFT profile-picture mania caused Ethereum emissions to rise in 2021. They reached an average of 8.1 megatons per year.
“There are people already who have offset a lot their own emissions. ArtBlocks is a large NFT company. All their emissions have been offset through us. Schuster stated that they are still looking for ways to offset their emissions through other projects.
Ethereums energy usage before the merge
Ethereum uses a proof of work system that consumes large amounts energy to keep the ledger decentralized from being tampered with. Although the energy used to run the blockchain is not directly related to transactions, critics argue they are linked. This is because the entire purpose of the blockchain is to process transactions ).
We can then get an idea of the energy cost to use the Ethereum blockchain on its current platform by taking the total energy cost of the Ethereum blockchain and multiplying it by the number transactions on the chain. This is not a perfect analysis, as it does not include transactions on layers above Ethereum like Arbitrum, Optimism and StarkNet. It may also fail to account for the amount renewable energy miner use.
According to Messari data, 428 million transactions were made on Ethereum in the past year. Ethereum consumes approximately 112 terrawatthours (TWh), of energy each year. The average transaction on Ethereum consumes 261.7 Kilowatt Hours (KWh). According to the EPA, this equates to 0.113 metric tonnes of carbon dioxide emitted by driving a gasoline-powered car for 281 mile.
This is a rough representation of the impact of the environment on the world.