Climate concerns and the future of nonfungible tokens: Leveraging environmental benefits of the Ethereum Merge

Edited by Peidong Yang, University of California Berkeley, Berkeley, CA; received February 22, 2023; accepted June 5, 2023
July 10, 2023
120 (29) e2303109120


This study presents a comprehensive analysis of potential alternatives to the current grid-only validated nonfungible token (NFT) transactions that would power an expected high number of NFT transactions in a climate-friendly manner. The findings of the study will provide a holistic view for policymakers to incentivize technological solutions that promote potentially green NFT processing.


The world is facing a formidable climate predicament due to elevated greenhouse gas (GHG) emissions from fossil fuels. The preceding decade has also witnessed a dramatic surge in blockchain-based applications, constituting yet another substantial energy consumer. Nonfungible tokens (NFTs) are one such application traded on Ethereum (ETH) marketplaces that have raised concerns about their climate impacts. The transition of ETH from proof of work (PoW) to proof of stake (PoS) is a step toward reducing the carbon footprint of the NFT sector. However, this alone will not address the climate impacts of the growing blockchain industry. Our analysis indicates that NFTs can cause yearly GHG emissions of up to 18% of the peak under the energy-intensive PoW algorithm. This results in a significant carbon debt of 4.56 Mt CO2-eq by the end of this decade, equivalent to CO2 emissions from a 600-MW coal-fired power plant in 1 y which would meet residential power demand in North Dakota. To mitigate the climate impact, we propose technological solutions to sustainably power the NFT sector using unutilized renewable energy sources in the United States. We find that 15% utilization of curtailed solar and wind power in Texas or 50 MW of potential hydropower from existing nonpowered dams can support the exponential growth of NFT transactions. In summary, the NFT sector has the potential to generate significant GHG emissions, and measures are necessary to mitigate its climate impact. The proposed technological solutions and policy support can help promote climate-friendly development in the blockchain industry.
The adoption of blockchain-based applications has risen substantially over the previous decade with “cryptomining,” which refers to a competitive process to earn the right to add an additional block to the chain. Since its advent, mining equipment has progressively transitioned from simple central processing units (CPUs) to application-specific integrated circuits (ASICs) to optimize hash generation. Understandably, this leads to large electric power consumption, translating to a steadily rising carbon debt. Over the years, different blockchain applications have emerged, with NFTs being the latest trend. This is evident from the $4.96 billion NFT market, with 17.8 million transactions validated in 2021 (1, 2). An NFT transaction validated on Ethereum (ETH), which previously used a proof-of-work (PoW) algorithm similar to bitcoin, consumed significantly more energy than an NFT processed on a blockchain that utilizes a proof-of-stake (PoS) algorithm used on ETH 2.0 after the implementation of “The Merge” (3). With a 377% rise in yearly NFT transactions in the last 5 y (2) and their expected boom in the near future, concerns about the environmental sustainability of the high energy consumption of NFT transactions have been raised (46). From the policy point of view, there is also growing attention toward the climate impact of crypto operations, with some states like New York passing legislation to ban cryptocurrency mining operations that utilize fossil-based energy sources (7).
The previously used consensus algorithm, PoW, drove the high energy demand for NFT transactions. PoW is popular because it is highly reliable for the safe addition of validated transactions to the blockchain (810). In response to the exorbitantly high emissions associated with PoW, PoS has been implemented by ETH to make the NFT transactions less energy-intensive (1114). This transition eradicates the traditional graphical processing unit (GPU)-based “miners” and instead introduces “validators” who would be responsible for processing NFT transactions. The ETH network operates on the concept of “gas,” a unit of measurement for the computational power required to execute specific blockchain operations. Each validator stakes its cryptocurrency to gain the right to validate an NFT transaction, earning “gas fees” in return. Since the safety of the network is ensured by using the cryptocurrency staked by the validators, each validator can operate on less energy-intensive CPUs. Accordingly, with the successful transition to PoS and the high proportion of NFT transactions in ETH-based marketplaces (15), it is widely estimated that the energy consumption of individual NFT transactions will be considerably less than under PoW (16, 17).
However, a pragmatic approach toward the rising popularity of NFTs necessitates consideration of the scaling effect associated with the total number of NFT transactions. As per the estimations from this work, the carbon debt since the advent of NFTs under the PoW consensus algorithm has already reached 2.03 Mt CO2e, equivalent to either 140% of the annual CO2 sequestered by Belgium’s forest cover or 30% of the same in the UK’s forests, or 50% in Hungary’s (18). An exponential rise in recorded NFT transactions would translate to more validators operating on the network, so even with significantly less energy consumption for individual NFT transactions, the cumulative effect of increased numbers of validators operating on fossil dominant grids will lead to a further rise in the carbon debt associated with NFTs. There exists a significant discrepancy between the existing academic and gray literature to reach a consensus on a universally adopted methodology to estimate the climate impact of blockchain-based cryptocurrencies and their applications. This also holds true for bitcoin mining, which is substantially ahead of the NFT sector. As an illustration, the discrepancy between the reported bitcoin’s carbon footprint can be as high as 38% (19, 20). A disparity of 47.8% exists between the reported share of renewables in the cryptomining operations as per previous studies (21, 22). Along similar lines, only one previous study systematically follows the Life Cycle Assessment (LCA) methodology to estimate the climate impact of a recognized cryptocurrency (23), but the climate impact of NFTs remains a knowledge gap. To fill this gap, we conduct a comprehensive analysis to advance our understanding of the climate impact of NFT transactions by integrating prominent network parameters, processing equipment specifications, and different growing trajectories for the number of NFT transactions with the LCA methodology, pre- and posttransition of ETH from PoW to PoS.
In the current practice, most of the validators and previously used mining equipment operate on grid electricity which involves significant contributions from nonrenewable sources and, hence, high greenhouse gas (GHG) emissions. Thus, besides investigating the climate impacts of NFT transactions, it is equally critical to analyze the possibility of a more climate-friendly NFT sector. The reduction in energy consumption of individual NFTs through the PoS algorithm creates an opportunity to process a significant number of NFT transactions using cleaner energy sources in a cost-competitive manner. As a result, a critical gap exists in advancing the understanding of the potential of renewable energy sources to satisfy NFT demand. To fill this knowledge gap, we suggest technological solutions for climate-friendly NFT processing, as illustrated in Fig. 1. Here, we investigate the efficacy of the proposed technological solutions as a transformative application in the blockchain sector. However, the effectiveness of the proposed solutions would depend on the characteristics and operational dynamics of the blockchain application, such as the intensity of energy consumption and governance structure. In this context, we follow a tailored approach in designing the framework specifically for NFTs and assess each technological solution relative to the average gas fees required to validate transactions. Renewable energy alternatives such as wind and solar have previously been explored for powering crypto-related applications, including bitcoin mining (2426). However, the market capitalization and the average prices of NFTs remain considerably lower than that of bitcoin (27, 28), making it cost-prohibitive to invest in renewable power infrastructure exclusively for NFT transactions. Thus, the solution portfolio entails minimum additional capital expenditure for validating NFT transactions using renewable energy sources not allocated for any other purpose. For instance, independent system operators often resort to increasing renewable power curtailments to preserve grid stability due to insufficient energy storage options for surplus power. We assess the potential of utilizing curtailed renewable energy as an alternative for validating NFT transactions. Similarly, strategically using region-specific renewable sources can also help meet NFT demand. As an illustration, equipping nonpowered dams (NPDs) with power generation capabilities can be accomplished in a shorter timeframe and at a lower cost compared to initiating a hydropower project. Therefore, we also explore the feasibility of validating NFTs using NPDs as an untapped clean energy resource.
Fig. 1.
The scope of this study investigating the climate impacts of NFT transactions and the proposed technological solutions to process the NFTs sustainably. (A) The prominent ETH network parameters have been integrated with the LCA methodology to investigate the climate impact of NFTs processed on a grid-powered validator network. (B) For a more climate-friendly NFT sector, we evaluate the direct powering of the validators using unutilized renewable energy sources, which require minimum additional capital expenditure. (C) Subsequently, to facilitate location-independent NFT processing, promising energy carriers such as green hydrogen and ammonia have been analyzed as potential alternatives to the direct electricity supply to the validator network. (D) Last, this study evaluates NFTs with net-zero GHG emissions based on behind-the-meter crypto operations and grid electricity in different states utilizing direct air capture (DAC) technology.
While location-specific renewable energy sources like curtailed wind and solar energy and hydropower from NPDs facilitate the direct electricity supply to the validator network, as the NFT sector grows, more validators will join the network, thus posing challenges to directly powering the validators. Therefore, there is a practical need to identify an appropriate energy carrier as an alternative to directly supplying electricity to validators to prevent a relapse toward dominantly using the grid. Different energy carriers have been previously used to transfer renewable power from its place of generation to other locations (2932). Accordingly, we evaluate promising energy carriers, including green hydrogen and ammonia, produced using unutilized renewable sources to facilitate location-independent NFT processing.
In addition to leveraging the grid to meet the growing demand for blockchain applications, many private equity firms and well-funded entities are repurposing decommissioned fossil power plants to power crypto operations, often referred to as “behind-the-meter” crypto activities (33). As a result, cryptocurrencies like bitcoin have been identified as a viable threat to achieving climate change mitigation targets (34). Although NFT transactions are currently less widespread than other crypto operations, NFTs could be among the major energy consumers in the coming years, despite the more energy-efficient PoS algorithm. The recent shift to PoS is an essential step in making the NFT sector more climate-friendly; however, its benefits could be subdued by the growing popularity of NFTs processed by grid-operated or behind-the-meter validator networks. As concerns over the climate impacts of blockchain applications intensify, it is crucial to explore ways to process NFTs with net-zero GHG emissions to enhance climate change mitigation efforts and achieve established emission reduction goals. Carbon-offsetting technologies, such as direct air capture (DAC), can be employed to counteract the GHG emissions generated by behind-the-meter or grid power supply for crypto applications. This strategy also presents an opportunity to use existing power sources not allocated for other applications to process NFTs. Therefore, in addition to using renewable energy for NFT transactions, we propose climate-neutral NFT processing that relies on behind-the-meter crypto operations and grid electricity in various states to achieve net-zero emissions. This approach can significantly reduce the carbon footprint of NFT processing while supporting the global fight against climate change.
The key findings of this work include the following:
A comprehensive analysis of climate impacts for NFT transactions pre- and post-transition of ETH from PoW to PoS indicates that energy consumption allocated to NFTs peaks at 4.36 TWh during the PoW phase and is projected to rebound back to 0.8 TWh toward the end of this decade under an exponential increase in the number of NFT transactions.
Without an effort to process NFTs using cleaner energy sources, the yearly emissions due to NFTs will reach 0.37 Mt CO2-eq by 2030, close to the CO2 emissions from a million single-trip flights for a passenger from New York to London (18).
The findings suggest that a total of 50 MW generation of potential hydropower from existing NPDs in the United States or 15% utilization of curtailed wind and solar energy in Texas can validate an exponential increase in NFT transactions.
A behind-the-meter facility at a rated capacity similar to the existing Greenidge power plant (14 to 104 MW) that solely mines bitcoins in Dresden, New York, can power NFT transactions under climate-neutral conditions with breakeven ETH gas fees ranging from $0.23 to $0.31 per transaction.
Among all the US states evaluated for processing NFTs under climate-neutral conditions with grid electricity, Idaho was the most economically competitive due to its low retail electricity price and 70.5% contribution of renewables to the grid (35), with a breakeven ETH gas fee of $0.156 per transaction.
Even though the PoS algorithm has been critiqued on its ability to secure the network (3638), the findings of this work indicate its implementation on ETH was a crucial step toward greening NFTs, especially regarding its reduced energy utilization. However, a more climate-friendly future for NFTs necessitates using clean energy sources based on economically competitive technological solutions. The policy implications of this work can be summarized as follows:
Science and Technology policy: Technological innovation in real-time spatial monitoring of network parameters is essential to provide more accurate energy consumption estimates for the validator network to process NFT transactions.
Crypto-asset policy: Climate-friendly NFT processing based on clean energy sources should be incentivized to decouple the validator network and fossil-dependent grids for processing transactions.
Climate and Energy policy: Economic benefits such as the Biden administration’s $85 credit for each metric ton of carbon dioxide (CO2) captured and stored should make climate-neutral NFT processing economically competitive, thereupon hedging into returns.


Climate Impacts for Processing NFT Transactions.

In this work, we estimate the energy consumption associated with NFTs from their advent to the end of this decade, as depicted in Fig. 2A. The investigated period can be divided into two phases based on the consensus algorithm used to validate the transactions, i.e., PoW and PoS. Under the utilization of PoW from 2017 to 2019, which operated on energy-intensive GPU miners, the energy consumed by NFTs increased from a relatively meager 0.07 TWh to 0.31 TWh. A slight dip in energy consumption around 2020 was observed when COVID-19 hit the world, disrupting the NFT market. However, as the different sectors of economies throughout the world stabilized, the NFT marketplaces concurred with the same and observed a 1055% increase in the popularity of NFTs from 2020 to 2021. In response to the excessive criticism of the energy consumption by PoW blockchain networks, ETH worked toward a successful transition from PoW to PoS, culminating in mid-September 2022, drastically decreasing the energy consumption of individual transactions on its network. However, due to the scaling effect toward the adoption of NFTs, the energy consumption under PoS is estimated based on different growing trajectories of the number of NFT transactions. The results indicate that under an exponential increase in the adoption of NFTs, the energy consumption can bounce back to 18% of the peak values observed during the utilization of PoW as the consensus algorithm on the ETH network by 2030. This depicts the importance of using cleaner energy sources to power blockchain operations, such as NFTs, utilizing the validator network.
Fig. 2.
Climate impacts for NFT transactions. (A) Yearly energy consumption for NFT transactions under ETH operating on PoW and expected energy consumption under PoS for multiple growing trajectories of the number of NFT transactions. (B) Comparison between energy consumption due to NFTs pre- and posttransition to PoS based on exponential growth in the number of NFT transactions with average annual energy consumed by US households. (C) Yearly GHG emissions due to processing of NFT transactions after implementation of PoS with validators utilizing grid power based on multiple growing trajectories of the number of NFT transactions. (D) Cumulative carbon debt accumulated due to NFTs under PoW and after implementation of PoS based on multiple growing trajectories of the number of NFT transactions.
The estimated NFT energy demand toward the end of this decade can be translated to uncover the yearly emissions (Fig. 2C) based on the spatial distribution of the validator network. The yearly emissions due to NFTs reach 0.37 Mt CO2e in proportion to the rise in energy consumption under a fast-growing trajectory of the number of NFTs validated. The calculated yearly emissions can be combined with the emissions under PoW to estimate the cumulative carbon debt for NFTs, as depicted in Fig. 2D. As expected, the carbon debt rises at a higher rate in the initial years due to the rapid adoption of NFTs coupled with the energy-intensive utilization of PoW. The further growth in carbon debt associated with NFTs depends on the increasing trajectory in the number of NFT transactions. Under the scenario of slow growth in the number of NFT transactions, the carbon debt marginally increases by 4% by 2030 compared to the carbon debt associated with NFTs prior to the introduction of PoS. In contrast, with a fast increase in recorded transactions, the cumulative carbon debt of NFTs could rise by 27% by the close of the decade. The peak energy demand under the implementation of PoW and the energy demand under PoS by 2030 are compared with the average annual energy consumed by US households, as illustrated in Fig. 2B. This highlights the importance of the scaling effect of NFTs: Even with reduced energy consumption for individual transactions, the total energy demand can be high enough to have a significant climate impact.

Direct Powering of NFT Transactions Using Unutilized Renewable Energy Sources.

Excess renewable energy available with the grid is one of the major challenges faced by the system operator to maintain the grid’s stability due to a lack of storage for energy oversupply. In the absence of a suitable option to utilize the excess power, the available energy needs to be curtailed. States like California increased their curtailment of renewable power by 64% in 2020 compared to 2019, and Texas curtailed a total of 4.87 TWh of renewable power (39, 40). In order to address the curtailment issue, technologies like battery energy storage systems could play a role, but their cost-intensive nature and energy loss associated with round trip efficiency hampers their implementation. Consequently, system operators search for solutions ranging from electric vehicles to demand-side regulations to maintain grid stability and prevent the waste of energy (41). In this study, we evaluate the possibility of processing NFT transactions using curtailment power. As an illustration, we specifically study whether NFT transactions can be processed using wind and solar curtailment energy in Texas due to its presence among the system operators with the highest percentage of potential solar and wind power curtailed (42, 43). A similar framework can be applied to different sources of curtailment energy in other states like California. Fig. 3A indicates the breakeven gas fee needed for powering NFT transactions with different levels of utilization of curtailment solar and wind power. A higher utilization percentage corresponds to increased capital expenditure in terms of investment in validators and auxiliary equipment, driving up the breakeven gas fee for an individual transaction from $1 per transaction at 15% utilization to $7 per transaction corresponding to near complete utilization (94%) of available curtailment energy. Fig. 3B indicates the solar and wind energy utilization for available power under one of the breakeven ETH gas fees, i.e., $5 per transaction. It can be observed throughout the year that wind energy utilization is higher than solar energy utilization, with the maximum utilization being 78% and 52%, respectively. While utilizing curtailment energy for NFT processing emerges as a viable alternative, it is crucial to acknowledge that this technological solution may encounter certain challenges. The availability of curtailed energy can be unpredictable and may not always align with the energy demand for a surge in NFT transactions leading to potential disruptions or inefficiencies in the operations (44). Additionally, concerns may arise regarding the quality and reliability of the electricity supplied, which can impact the performance of equipment used in the application, potentially leading to increased maintenance costs (45).
Fig. 3.
(A) Breakeven gas fees for NFT transactions under different utilization of curtailment power in Texas with solar and wind contributions. (B) Variation in monthly solar and wind power utilization to process NFT transactions with breakeven gas fees of $5/transaction. (C) Cumulative NFT transactions under multiple growing trajectories and transactions processed using 50 MW of potential hydropower and 15% utilization of curtailment power in Texas. (D) Total NFT transaction that can be processed using the increasing potential of hydropower from NPDs and the corresponding distribution of capital expenditure required. (E) Total profits from NFT processing based on average price across different platforms using NPDs at varying combinations of hydropower generation and retrofitting costs.
Installing hydropower projects is often associated with very high investment costs for both large and small-scale projects, but retrofitting power generation equipment to existing dams can be significantly cheaper (46). NPDs refer to dams that are utilized for applications such as water supply and inland navigation. As most of the financial and environmental costs associated with dam construction have already been incurred, adding additional power generation equipment to these NPDs results in lower costs and faster project completion than undertaking a dam project. The US NPDs have the potential to add 12 GW of renewable power capacity, corresponding to a 15% increase in the existing fleet of hydropower generation (47). Fig. 3D highlights the number of NFT transactions processed under an installed capacity from NPDs. As an illustration, we evaluate the number of transactions that can be powered based on the maximum potential hydropower from NPDs in New York, i.e., 295 MW. However, the same results also apply to other states based on their respective hydropower capacity. It has been observed that there is little to no scaling effect for capital expenses when using NPDs for NFT processing. The highest expenditure is validators, followed by hydropower generation equipment. However, the utilization of NPDs for NFT processing faces some challenges. It is possible that only a limited number of NPDs may be scheduled for development or retrofitting by the private sector, resulting in varying power generation capacities for NFT processing. Additionally, the costs of retrofitting NPDs can differ significantly due to site-specific factors and the range of hydraulic heads available at various locations (48). Consequently, the expenses associated with retrofitting and power generation from NPDs could significantly impact the feasibility of this technological solution for NFT processing. Fig. 3E illustrates the influence of varying retrofitting costs and total power output from NPDs on the profitability of processing NFT transactions. Using the average gas fees across various NFT platforms (49), maximum profits are achieved with higher power generation capacities and minimal retrofitting expenses. On the other hand, profits decline when available power from NPDs is low and retrofitting costs are high. Taking into account the growing trajectories of the number of NFT transactions, Fig. 3C demonstrates that even the demand for rapid growth in NFTs can be sufficiently validated using available curtailment power in Texas and potential hydropower from NPDs. The results underscore the potential of various underutilized renewable power sources in the United States that can operate the validator network, thereby helping mitigate the rising carbon debt associated with NFTs.

Energy Carriers to Process NFT Transactions.

With the expected boom in NFTs worldwide, many validators will be required to process these NFT transactions. Apart from the direct supply of electricity to validators, we also study the use of energy carriers to power the validator network. Using energy carriers to operate the validators is critical to facilitate location-independent NFT processing and prevent the utilization of grid electricity where renewable power generation may not be readily available. This study evaluates two energy carriers: green hydrogen and ammonia. Many facilities with large renewable capacities are being developed to supply available renewable energy to energy-hungry markets using these energy carriers. As an illustration, a 26-GW renewable plant in Australia will produce green hydrogen and ammonia to be transported to countries like Japan and South Korea (50). Green ammonia is studied as a potential alternative to green hydrogen owing to its higher energy density and easier storage and transport than gaseous hydrogen (51). The emission components corresponding to the production and transportation of both energy carriers have been included in the study to estimate the life cycle GHG emissions corresponding to each NFT processed using an energy carrier. Fig. 4A presents a comparative analysis of the number of NFT transactions that can be processed using different quantities of potential hydropower. The analysis considers two scenarios: directly supplying electricity to the validators and using energy carriers such as green hydrogen or green ammonia to power the validators. The results show that as the available renewable energy resources increase, the number of NFT transactions that can be processed also rises because a greater power supply, in either case, leads to more energy being available for operating the validators. However, it is important to note that the number of transactions processed using direct electricity supply significantly outperforms the use of energy carriers by a considerable margin. This disparity can be attributed to the different equipment and processes required when using an energy carrier. For instance, in the direct supply scenario, all the available power can be used to run the validators and auxiliary equipment. In contrast, for using an energy carrier such as green hydrogen, the available renewable energy must power an electrolyzer to produce hydrogen, which is then utilized in a fuel cell at the validators’ location. The electrolyzer and fuel cell technologies have inherent inefficiencies that reduce the available energy for operating the validators. Similarly, when using green ammonia as the energy carrier, the available energy generates hydrogen with an electrolyzer and nitrogen from an air separation unit (ASU). These elements are then combined to produce green ammonia. To extract power, an ammonia cracker and a fuel cell unit are required. The electrolyzer, fuel cell, ASU, and cracker technologies each have inefficiencies, further reducing the available energy. Consequently, fewer transactions can be processed compared to directly supplying energy to the validators.
Fig. 4.
(A) Total NFT transactions that can be processed using different values of potential hydropower from NPDs utilizing direct powering, green hydrogen, and green ammonia as energy carrier alternatives. (B) Breakeven gas fee and total transactions that can be powered under different utilization rates of curtailment power in Texas with green hydrogen as an energy carrier. (C) Breakeven gas fee to power NFT transactions utilizing green hydrogen and green ammonia with different transport distances. (D) Lifecycle GHG emissions to power NFT transaction using green hydrogen as the energy carrier with different transport distances under a fixed breakeven gas fee of $5/transaction.
While it is essential to examine the use of energy carriers for processing NFTs, it is important to consider the transportation distances of these carriers. Fig. 4C demonstrates the impact of transportation distance on the breakeven gas fee for both hydrogen and ammonia energy carriers, with the total available power from NPDs remaining constant. The results show that greater distances lead to higher transportation costs, increasing the breakeven gas fee required for processing NFTs. Similarly, Fig. 4B illustrates the use of green hydrogen as an energy carrier to power NFT transactions by harnessing curtailed wind and solar power. As observed in the direct powering scenario with curtailed wind and solar energy, an increase in the utilization of available wind and solar curtailment energy leads to higher breakeven gas fees. This trend is due to the increased capital expenditures in the electrolyzer, fuel cell, validator, and auxiliary units. Additionally, increased use of these renewables results in a higher production rate of green hydrogen, allowing for more NFT transactions to be processed. The functional unit–based emissions for NFT transactions at a breakeven gas fee close to the average gas fees across different platforms were examined, considering the transportation of green hydrogen over various distances. As transportation distances increase, the emissions associated with each NFT processed also rise, along with a growing proportion of transport-related emissions, as depicted in Fig. 4D. In conclusion, using energy carriers such as green hydrogen and ammonia to power NFT transactions is influenced by multiple factors, including transportation distances and the utilization levels of available renewable energy sources. As these variables change, the breakeven gas fees and emissions associated with NFT transactions will also be affected.

Climate-Neutral Processing of NFT Transactions.

Climate-neutral NFT processing based on the grid-only-powered operation of validators and the current use of existing fossil-based power plants for behind-the-meter crypto operations is investigated in this study. “Behind-the-meter crypto operation” refers to a facility that uses fossil-based power plants dedicated to mining cryptocurrencies. Greenidge Generation LLC, a natural gas-based power plant, recently installed a facility in Dresden, New York, to dedicate 14 MW of power toward bitcoin mining and plans to increase its capacity to 104 MW (52). While some states like New York have passed legislation to prevent fossil-fueled crypto operations (7), as the adoption of blockchain-based applications increases, we can expect more facilities with dedicated power generation for operating the mining equipment. Accordingly, we evaluate the possibility of a fossil-based behind-the-meter systems NFT application. The electricity generated from this plant will be utilized to operate the validators and the associated auxiliary equipment. The operations of this facility have been investigated under three plant capacities, i.e., 14, 22, and 104 MW, imitating the planned increment in the capacity of the already functional Greenidge power plant (33, 52). Since fossil-based power plants are often associated with high greenhouse gas emissions, this study focuses on developing climate-neutral “behind-the-meter” NFT processing utilizing DAC technology. The net emissions at different capacities have been categorized into four scenarios of plant operation, differentiated based on varying electricity generation processes and plant heat rates, i.e., EPA-Ave, NL-32%, EPA-32%, and EPA-G, following the results of a previous study in the literature (33). In the case of the EPA-Ave scenario, the heat rate is equivalent to the average heat rate for plants in the US functioning on EPA WebFire’s electricity generation process (53). The NL-32% scenario uses a different electricity generation process from NREL (54), with an efficiency of 32%. Subsequently, the EPA-32% scenario has a similar heat rate to the NL-32% but utilizes the EPA database. Last, the Greenidge power plant has a higher heat rate than other modern plants (55), represented by the last scenario, EPA-G, with the maximum heat rate among other scenarios. To achieve climate neutrality, an equivalent quantity of CO2 would be captured using the DAC technology based on different scenarios of plant operations at varying plant capacities.
Fig. 5 A and B depict the breakeven gas fee required and the number of NFT transactions validated under climate-neutral conditions using a natural gas-based power plant, respectively. The breakeven gas fee required depends on the four considered scenarios of the plant operations, which determine the net emissions from the process, affecting the total CO2 to be captured using the DAC technology. Based on the corresponding characterization factors for plant operation under the different scenarios, the highest emissions correspond to the EPA-G scenario, and the least correspond to the EPA-Ave scenario. Accordingly, the breakeven gas fee required under the EPA-G scenario is 31% more than the EPA-Ave scenario of plant operation. Although behind-the-meter crypto operations coupled with DAC present an opportunity for net-zero emission NFT processing, this strategic choice also faces some challenges. One such challenge is the aging infrastructure of decommissioned power plants, which could pose risks related to structural integrity (56). Therefore, assessing the condition of these plants and ensuring the safety and stability of the infrastructure may necessitate substantial investments in inspections and retrofitting. Furthermore, local communities may resist repurposing decommissioned fossil power plants due to concerns about potential environmental or health risks (57). Addressing these concerns and obtaining necessary approvals can delay the redevelopment process.
Fig. 5.
(A) Breakeven gas fee to achieve climate-neutral behind-the-meter NFT processing with different power plant capacities (obtained using Greenidge power plant in New York as reference) under different scenarios (EPA-G, NL-32%, EPA-32%, and EPA-Ave) to evaluate the emissions from plant operation. (B) Total NFT transactions processed using the different scenarios of climate-neutral behind-the-meter NFT processing with different power plant capacities. (C) Breakeven gas fee to achieve climate-neutral NFT processing based on state electricity grids. (D) Total NFT transactions processed using electricity from different state grids under climate-neutral conditions.
The other implementation of climate-neutral NFT processing investigated in this study is based on the utilization of grid power from different states in the United States. Similar to the behind-the-meter NFT processing, climate neutrality is achieved by capturing CO2 using DACs, with the amount of CO2 captured determined by the respective electricity mix for each state. As depicted in Fig. 5C, the breakeven gas fee for each state varies from $0.16 per transaction to $0.43 per transaction. The determining factors here are the retail electricity price and the electricity mix for the respective states. A lower electricity price leads to a lower operating cost, reducing the gas fee required. Similarly, a higher contribution of nonrenewable energy sources to the state electricity grid drives the breakeven gas fee since a larger DAC system is required. Accordingly, states like Idaho, with lower electricity prices and contributions from clean energy sources as high as 70.5%, have the least breakeven gas fees, as depicted in Fig. 5D. On the other hand, states like Hawaii, with a very high contribution from fossil energy sources like petroleum (65%), can power 20% fewer transactions compared to Idaho.


Blockchain technology and its applications, including NFTs, have become an integral part of the digital landscape (58), transforming industries and creating new opportunities. The findings of this study indicate that the aggregate energy consumption and corresponding emissions attributed to NFTs are on par with other prominent energy consumers, emphasizing the need to investigate alternative consensus mechanisms, like PoS, which rely on significantly lower computational resources. Transitioning from the existing methodology requires the support of a sufficient number of miners and users due to its governance structure (23). Despite considerable efforts and delays, the highly anticipated implementation of “Ethereum Merge” serves as a catalyst for a more climate-friendly adoption of NFTs. The transition of ETH to PoS is a pivotal step toward greening the blockchain industry, but it is also essential to monitor the scaling effect associated with the increasing popularity of NFTs. It is unrealistic to expect an immediate and widespread shift in various blockchain applications toward computationally efficient algorithms with a significantly reduced climate impact. In this context, this work incorporates multiple adoption trajectories for NFTs and analyzes their climate impacts before and after the PoS transition. Furthermore, it was noted that emissions associated with NFTs are affected by time-dependent aspects, such as the computational power supplied to the network, and location-specific factors, like the energy mix used for validating transactions. Implementing PoS does not eliminate the need for technical innovation; instead, it highlights the importance of advancements in areas like monitoring spatial and temporal energy consumption specific to the network of validators processing NFT transactions. To implement appropriate measures, policymakers must understand the carbon footprint of increasingly popular blockchain applications like NFTs, enabling them to guide the industry toward sustainable practices while capitalizing on the benefits offered by blockchain technology.
While the current utilization of the validator network under PoS has led to a substantial reduction in the energy consumption of individual NFT transactions, the findings of this study reveal a concerning trend. Yearly emissions due to a network of validators operating across a similar spatial distribution as the previous ETH miners could reach substantial values toward the end of this decade if the current demand for NFTs continues to rise exponentially. This trend highlights the importance of implementing a technological framework that leverages cleaner energy sources to satisfy the expanding NFT demand. Although the NFT market is largely unregulated in its current state, targeted government interventions incentivizing technological solutions that promote green NFT processing based on clean energy sources can help decouple the validator network from fossil-dependent grids for transaction processing. Following the well-established LCA methodology, this study evaluates technological solutions for powering validators using unutilized renewable energy sources. For instance, using solar and wind curtailment energy in Texas to power the validator network can lead to a 91% reduction in functional unit-based emissions per NFT transaction. Similarly, tapping into potential hydropower from NPDs can accommodate the exponential growth in NFT demand. In addition to the reduced climate impacts associated with validating NFTs using clean energy sources, the breakeven gas fees of the proposed technological solutions are lower than the average gas fees across different NFT trading platforms, demonstrating their economic competitiveness. Consequently, a comprehensive analysis of potential alternatives to current grid-powered NFT transactions can contribute to the development of a policy agenda to regulate a surge in NFT transactions in a climate-friendly manner.
Although exploring the use of clean energy sources for processing NFTs is crucial, it is critical to note that in the current practice, blockchain applications are predominantly fueled by fossil-dependent power. Consequently, the carbon footprint of some blockchain-based applications has garnered significant attention, leading to strict measures such as China's ban on them due to their substantial impact on electricity demand met through fossil sources (59). In light of this, developing climate-neutral technological systems for NFT applications could play an essential role in helping countries achieve their committed carbon emissions reduction targets and limit the global temperature rise to below 1.5 °C (60). This study analyzes climate-neutral NFT processing by examining grid-only-powered NFTs and the recent trend of utilizing fossil-based power plants for cryptomining operations. The proposed technological solutions involve a modular unit for DAC technology combined with carbon capture and storage. As a result, government incentives to maintain the economic feasibility of climate-neutral NFT processing facilities could be instrumental in promoting widespread adoption and reducing reliance on carbon-intensive NFT processing. Such incentives could include economic benefits like the Biden administration's $85 credit for each metric ton of CO2 captured and stored, which would render climate-neutral NFT processing economically competitive and contribute to profits.

Materials and Methods

In this section, we introduce the methodology used to assess the climate impacts of NFT transactions pre- and postimplementation of the Ethereum Merge. This analysis is conducted based on the network parameters corresponding to validating NFT transactions to estimate the associated emissions. Subsequently, we show the framework utilized for the environmental and economic evaluation of the proposed technological solutions to process NFTs in a climate-friendly manner. Specifically, we calculate the breakeven average gas fees and the life cycle GHG emissions corresponding to each NFT transaction validated using technological solutions.

Quantification of Energy Consumption by NFTs Pre- and Posttransition to PoS.

Digital currencies like Bitcoin and ETH are based on a technology known as blockchain, which serves as a secure and transparent database system for sharing and tracking information within a network. Each cryptocurrency functions on its unique blockchain, acting as an open ledger responsible for maintaining and securing decentralized transaction data. NFTs are digital assets that reside on a blockchain and are differentiated from other tokens by their distinct identification codes. NFTs typically represent ownership of digital artwork, collectibles, and other virtual assets. Fig. 6 illustrates the NFT transaction process, commonly executed on NFT marketplaces and verified through the ETH blockchain. The process starts when an individual intending to sell an NFT issues a token to the selected NFT marketplace that functions as the facilitator for such transactions. Following the token issuance, the transaction is disseminated to the miners in the blockchain network. These miners undertake the task of validating and approving the transaction. Once successfully validated, the transaction is incorporated into the blockchain as a new block containing the immutable transaction records. Lately, NFTs have experienced a decline in daily transactions and average prices. However, many crypto operations featuring well-known cryptocurrencies, such as Bitcoin and ETH, have undergone periods of decline in daily transaction volume and average valuations. These blockchain applications recovered from the encountered downturns, as evidenced by the historical network data (61, 62). Previous studies have also highlighted the economic potential of the blockchain sector, which has recovered from different market dips (6365). Thus, it is crucial to investigate the climate impact of NFTs and promote potentially green NFT processing and climate-friendly development in the blockchain industry.
Fig. 6.
Overview of the NFT transaction process implemented at NFT marketplaces with the transactions validated on the ETH blockchain.
Out of all the existing platforms used for NFT transactions, ETH-based platforms are the most prominent; hence, this study focuses on the NFT transactions carried on these platforms. Krause et al. (66) estimate the energy consumption for four major cryptocurrencies, including ETH, which utilizes the network hash rate and the mining equipment efficiency. In order to estimate the energy consumption for NFTs during the PoW phase, this paper combines energy estimation using the hash rate and equipment efficiency with other input parameters such as total NFT transactions and share of NFTs in gas occupancy of the ETH network to estimate the total energy spent validating the transactions by GPU miners. The total power consumption in the network is calculated using the mining equipment efficiency, which indicates how much energy is consumed to perform computation on any given network, and the total computations being performed based on a daily resolution scale, as depicted in SI Appendix, Eq. S1. Although a wide spectrum of mining equipment is commercially available, cryptocurrency mining is inherently competitive. Thus, miners always use the most efficient available mining equipment, so there is a considerably high uniformity in the mining equipment used by miners regardless of the location. The percentage contribution of NFT toward the total computational power is calculated using SI Appendix, Eq. S2 and considers the gas available on the ETH network and the amount of gas used in NFT transactions. Based on the calculated power consumption and the estimated contribution of NFTs toward the total transactions, we get the energy consumption allocated to NFTs. Accordingly, the total energy spent in a given year on validating the NFT transactions can be calculated. The ETH network under PoW included a spatial distribution of GPU miners, with each miner using its grid electricity. This spatial distribution was used in SI Appendix, Eq. S4 along with the respective characterization factors for the electricity grids to estimate the associated yearly emissions for NFT transactions. The cumulative carbon debt for the NFTs under PoW was estimated by summing up the yearly emissions to validate the NFTs.
After the implementation of Ethereum Merge (3), the ETH platform utilizes PoS to validate all types of transactions. Hence, the previous data regarding the network hash rate and the mining equipment efficiency do not correspond to the implementation of NFT transactions under PoS. Under the PoS phase, which came into operation in mid-September 2022, the ETH network now relies on a network of validators to process the transactions. This transition from PoW to PoS went underway in December 2020, when ETH launched the platform “BeaconScan” to create a system of validators responsible for processing the transaction once the Ethereum Merge is complete (67). Simultaneously, during the phase when validators were pledging their coins on the BeaconScan network, the ETH network continued to operate in its usual fashion under PoW. Accordingly, we follow a series of steps, as depicted in Fig. 7, to estimate the energy consumption under PoS based on the recorded data of the number of NFT transactions and the number of validators between December 2020 and September 2022. We begin with calculating the total computational hours based on the available data on BeaconScan. Second, we calculate the average percentage contribution of NFTs in all types of recorded transactions on a daily resolution scale during the period when the validators were staking on BeaconScan and thus estimate the total computational hours required to power these recorded NFT transactions using the total number of days as depicted in SI Appendix, Eqs. S6 and S7. Under PoS, this study considers that validators on the BeaconScan would validate the same number of transactions validated by the miners due to factors such as even after the switch, the gas price on the ETH network would also barely increase (68). Subsequently, SI Appendix, Eqs. S8 and S9 indicate that based on the recorded number of NFT transactions and the computational hours required, we calculate the total NFT transactions and the validator efficiency, i.e., the number of NFTs processed by validators in a given time. Last, we estimate the growth in the number of NFTs under three scenarios: nominal, fast, and, slow. The nominal trajectory is obtained following the fitted polynomial curve with a coefficient of discrimination (R2) over 0.99. The fast and slow trajectories follow the exponential and linear projections, respectively, as utilized in a previous study by Zade et al. (69) to estimate blockchain parameters. The different growth trajectories for NFT transactions are combined with the calculated validator efficiency and the energy consumed by validators to get the total energy consumed by NFTs under PoS. Henceforth, based on the expected energy consumptions under PoS, we can estimate the annual emissions due to NFT transactions in the coming decade and, thus, the total carbon debt for all NFT transactions. This would present a comparative analysis of the same blockchain application executed on the two different consensus algorithms.
Fig. 7.
Overview of the utilized methodology for analyzing the climate impact of NFTs under PoW and PoS.

Evaluation of Technological Solution to Sustainably Validate NFTs.

One of the crucial aspects of this transition from PoW to PoS is to increase the scalability of the ETH network, where the miners using computationally heavy GPU and ASICs can be replaced by validators who can operate on computationally less intensive CPUs. In this study, we evaluate different technological solutions for powering NFT transactions using unutilized renewable energy sources or under climate-neutral conditions. We utilize the following model formulation individually for different classes of technological solutions to minimize the average gas fees required (Gaverage) and correspondingly calculate the climate impact for processing each transaction. The detailed equations are presented in SI Appendix.
s.t.Load balance constraints given in SI Appendix, Eqs. S12S18, S34S42, and S63S65
Economic evaluation constraints given in SI Appendix, Eqs. S19S25, S43S58, and S69S75
Life cycle environmental impact analysis constraints given in SI Appendix, Eqs. S26S33, S59S62, and S66S68
The load balance constraints are used to distribute the available power into different equipment and calculate the production rates. While using unutilized renewable energy sources, the load balance indicates a distribution of available power between the validators and the auxiliary equipment. However, this load balance differs in the case of other technological solutions. For instance, in climate-neutral NFT processing, the available power must be used to operate the DAC, apart from the validators and the auxiliary equipment. The economic evaluation constraints begin by estimating the total revenue generated by processing NFTs. The total capital expenditure depends on the equipment required for the technological solution. The other cost components include the operating expenditure for the associated equipment, transportation of the produced energy carrier, operating costs associated with the behind-the-meter plant operations or electricity import from the grid, and the storage and transportation cost for the captured CO2. We utilize the LCA methodology to evaluate the functional unit-based emissions per NFT transaction. Fig. 8. indicates the system boundary to implement a “cradle-to-gate” life cycle analysis to calculate the associated emissions for processing NFT transactions using the evaluated technological solutions. Each technological solution is connected with its respective subsystems within the system boundary to calculate the estimated emissions.
Fig. 8.
System boundary for the environmental and economic evaluation of the technological solutions for powering NFTs.

Data, Materials, and Software Availability

All study data are included in the article and/or SI Appendix.


This material is based on work supported by the NSF under Grant No. 1643244.

Author contributions

F.Y. designed research; A.L. and F.Y. performed research; A.L. and F.Y. contributed new reagents/analytic tools; A.L. and F.Y. analyzed data; and A.L. and F.Y. wrote the paper.

Competing interests

The authors declare no competing interest.

Supporting Information

Appendix 01 (PDF)


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Information & Authors


Published in

Go to Proceedings of the National Academy of Sciences
Go to Proceedings of the National Academy of Sciences
Proceedings of the National Academy of Sciences
Vol. 120 | No. 29
July 18, 2023
PubMed: 37428917


Data, Materials, and Software Availability

All study data are included in the article and/or SI Appendix.

Submission history

Received: February 22, 2023
Accepted: June 5, 2023
Published online: July 10, 2023
Published in issue: July 18, 2023


  1. climate
  2. renewable energy
  3. blockchain
  4. climate neutrality
  5. Ethereum merge


This material is based on work supported by the NSF under Grant No. 1643244.
Author Contributions
F.Y. designed research; A.L. and F.Y. performed research; A.L. and F.Y. contributed new reagents/analytic tools; A.L. and F.Y. analyzed data; and A.L. and F.Y. wrote the paper.
Competing Interests
The authors declare no competing interest.


This article is a PNAS Direct Submission.



Robert Frederick Smith School of Chemical and Biomolecular Engineering, Cornell University, Ithaca, NY 14853
Robert Frederick Smith School of Chemical and Biomolecular Engineering, Cornell University, Ithaca, NY 14853
Cornell Atkinson Center for Sustainability, Cornell University, Ithaca, NY 14853


To whom correspondence may be addressed. Email: [email protected].

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