The hard-won Ethereum Merge makes the world of NFTs far less environmentally hazardous. Arguably the most popular blockchain in the world and the one preferred by the majority of the NFT (non-fungible token) market, Ethereum, recently finished a software update that would significantly cut its energy consumption- by 99%.
This transformation, known as “the Merge,” has fundamentally altered the security architecture that supports the Ethereum blockchain. Its native coin Ether is the second-largest cryptocurrency in the world and is currently worth $200 billion. Vitalik Buterin, the founder of Ethereum, announced its completion on Twitter on the 15th of September. It has been a journey of 7 years, wrought with doubt, conflict, promise, and ambition.
According to a report released by the research firm Crypto Carbon Ratings Institute, Ethereum’s electricity use is anticipated to plummet overnight by a staggering 99.988% and its carbon emissions by 99.982%. (CCRI) post-Ethereum Merge. In line with the research, Ethereum used 23 million kilowatt hours annually prior to the Merge. In the future, that will only amount to 2,600 megawatt-hours annually.
Both cryptocurrency sceptics and advocates have expressed concern and criticism over Ethereum’s energy use, which is typical of most other blockchains. Its annual energy use was compared to that of the Netherlands earlier this year and was higher than that of the Philippines or Pakistan. Bitcoin mining is still a tiny industry globally, despite the fact that energy consumption has dramatically increased as the sector has grown.
The Bitcoin mining network uses about 100 TWh of energy annually or 0.06% of global energy use. This suggests that the Bitcoin mining industry uses slightly less power than the video game industry. We may also compare the energy use of Bitcoin mining to other, more well-established energy-intensive industries, such as banking, which consumes 56 times as much energy.
Up until recently, Ethereum’s blockchain transactions were verified through a process known as “proof of work.” To validate fresh blocks, network users had to solve challenging math problems. This approach uses a lot of energy because it utilises the processing power of numerous servers. This approach has since mostly been superseded with one known as “proof of stake,” in which transactions are approved by a collection of people and organisations that have staked their tokens as security for the network. As such, it uses a lot less energy because it requires fewer individuals to continuously confirm blocks on the chain.
What Does This Mean for NFTs?
As Ethereum is the blockchain that is most frequently used to mint and trade NFTs, their energy footprint has decreased, which is good news for people in the art world who are inclined toward NFTs. Although there have been other blockchains that promised to cut carbon emissions in a similar way, they tended to still rely on the Ethereum network and were considerably less well-known. The market, which has drastically declined this year after the exhilarating highs of 2021, may benefit from the removal of a big barrier for some potential NFT adopters who may have been wary due to the format’s carbon footprint. The price of Ether has increased about 70% since its low point in June as a result of anticipation of the Merge. Bitcoin, in contrast, only increased a bit over 10% throughout the same time span.
As non-IRL methods of supporting artists continue to advance, it’s conceivable that they will use less carbon than the conventional, physical art sector. The trading volume for NFTs surpassed $13 billion in 2021 and is projected to reach $7,390.8 billion by 2028. The market is still in its infancy and there remains a lot of room for growth and innovation. More advancement at an exponential rate is expected in the coming years.
