A recent series of posts by Memo Akten make a compelling case regarding the negative environmental impact of Crypto Art, casting considerable shade on the movement as a whole, as long as it remains tightly coupled with blockchain technology. We feel it is important to consider all viewpoints regarding the NFT ecosystem, because we we are firm believers in the concept, and negative aspects, right or wrong need to be mitigated as much as possible.
The blog post is here: https://memoakten.medium.com/the-unreasonable-ecological-cost-of-cryptoart-2221d3eb2053
We have two major areas of disagreement with the premise of the blog:
- The Ethereum Ecosystem is aggressively pursuing transition to PoS, by design, thanks to an Ethereum concept known as the “Ice Age”.
- It is disingenuous to blame the entirety of the environmental impact of a PoW blockchain system on the end users (the transactors) when the cost/benefit/environmental trade off calculus is computed by the blockchain miners.
ETH is Aggressively Pursuing PoS
The Ethereum ecosystem is extremely aware of the negative environmental impacts of PoW, so much so that an actual impetus for transition is coded into the platform by way of the “Ice Age”. I won’t get into a summary of what that is here, as this isn’t meant to be a technical blog (more reading here: https://ethgasstation.info/blog/what-is-ethereums-ice-age/), but the point of the Ice Age is to motivate users of the platform to quickly transition away from PoW and to make sure financial incentives carefully align with that objective.
Memo Akten hinges their entire argument on the inefficiency of PoW Blockchain, but only spends a single footnote (Footnote #1) to address the inevitability of Ethereum PoS, despite admitting that “Ethereum is currently the most popular blockchain platform underlying CryptoArt — or more broadly speaking: Non-Fungible Tokens (NFT).”
We feel this sort of argument would be more applicable if Ethereum had a non-existent timeline for the transition or even a nebulous one. But as we speak, the transition process is in full flight, with many millions of ETH locked in the Eth 2.0 beacon chain, which is a very powerful motivator for the ecosystem to complete the transition.
The Miners are Responsible for PoW Impacts, not the Transactors
It is our philosophy that the environmental impact of energy used in the operation of a PoW blockchain is the responsibility of the Miners and not the Transactors on a PoW blockchain. The rationale for this is that the Miners are the party that receives the incentives from the PoW blockchain activity, in the form of both block rewards as well as transaction rewards. The transactor is just consuming a service with literally zero visibility into the real or intangible costs of the transaction.
As a Transactor, I care about security and availability of a service on which I can transact. Right now, there is only one proven secure, reliable source for transacting NFTs, and that is Ethereum.
As a Miner, I care about the input costs and output value of the operation I am conducting. A miner in a 1st world country may or may not have to be concerned about the carbon impact of their operations, depending on the regulator authority. A miner in a 3rd world / developing country most likely does not have to worry about adequate / effective regulation. I absolutely agree that a fundamental flaw of PoW blockchain is that it incentivizes bad actors to set up large mining operations in under regulated regimes to artificially lower the input costs of the mining operation and thus increase profitability.
PoS recognizes this and seeks to strip this incentive system away from Miners, especially the bad actor Miners, and should be wholeheartedly supported for seeking to do so.
In summary, we feel that if you have a problem with PoW blockchain, especially Ethereum, then the best action you can do with real impact is figure out what you can do to support that platform’s transition to PoS. We feel that boycotting NFTs as a whole is counterproductive, because it directly counteracts one of the most exciting potential goods that Crypto enables.