This is Your NFT Wake-up Call
Gosh. I’ve got myself into a right ol’ rabbit hole with this topic over the last few months, particularly in the last 24 hours.
The deeper I delve, the more the layers unravel before my eyes. The dark ramifications for this relatively new technology run far deeper than I ever imagined but I’ll come to that later.
NFTs — Non-Fungible Tokens — are perhaps the hottest topic in the art world at the moment, a new way to earn money from art which has exploded onto the scene during the pandemic as creators scrabble to earn a crust.
The latter is understandable. After all, these are tough times for artists with many of the traditional income-generating mechanisms pulled from under our feet in March 2020.
Then a new technology by the name of NFT strolled into town, apparently offering a whole new way to bring value to our treasured efforts. It’s already made some folk into millionaires — the wildest of riches seem tangible again in the toughest of times.
And that’s got to be good for artists and the art world, right? Right?
I’ve rolled my eyes at NFTs from the outset because I simply haven’t been able to get a handle on their attraction, a sentiment that’s persisted even after absorbing so many articles and videos over recent months.
NFTs may be a relatively new way to create currency from art but artificial mechanisms to generate perceived value certainly aren’t a novel concept.
As we know, photography is a highly reproducible medium so we’ve always needed to think of ways to create additional value so that people will feel more attracted to buying our work, in turn helping us pay the bills and continue to make new photographs.
Limited edition prints are a prime example of that.
When people buy one of my prints they have a beautiful, tangible object to hang on the wall and enjoy day-after-day for years to come.
It can even be handed down through the generations, a permanent memento of that chap who travelled to every lifeboat station.
Which brings me onto a pertinent question:
WHAT IS AN NFT?
In the simplest of terms, an NFT is a unique digital token associated with an artwork. It is not the artwork itself. People can buy and sell these unique digital tokens and make money from them. Just as with any trade, they can lose money too.
After rubbing your eyes, take a moment to re-read that last paragraph again.
That’s right — if you purchase an NFT, you’re not buying the artwork itself, you’re buying a string of computer code associated with it. In essence, a web link.
The string of computer code is described as a unique digital token minted on a blockchain.
Believe it or not, you don’t even have to own an artwork to create an NFT associated with it. The ownership of the unique digital token appears to be the attraction for the NFT collector rather than any tangible object.
I say ‘appears to be’ because I’m still trying to wrap my head around it.
Margaret Wertheim highlights this in the first really useful article I found on the topic back in May:
“One difference with an NFT is that the exact image it links to is probably available online for anyone to enjoy as much as the collector who’s paid thousands of dollars for a token.”
She goes on to say:
“Perhaps the rights NFT collectors most highly value are bragging rights: They can say they “own” a work. Yet their copy has no special qualities aside from its NFT, so under the hood of the hype, the frenzy is about the token, in which there is now a booming secondary market.
“It’s hard not to see this as a case of digital tulip fever. Can you imagine paying millions of dollars for a bar code? Then again, perhaps this is the apotheosis of Warhol’s soup can strategies — attributing value to that which seems the most banal.“
Have a look at the video below to see an expert describing what NFTs are and why they’re so popular. He’s not just any old expert either, he’s Alex Atallah, the co-founder of OpenSea, the world’s largest NFT marketplace (according to their own website).
Yet, despite commanding such a supreme perspective on the topic, even Alex appears to struggle at times when it comes to describing NFTs:
Still scratching your head? Me too.
The implications for photography really dawned on me during a Twitter conversation back in May with astronomy photographer Andrew McCarthy on various aspects of the NFT model:
As you can see above, I found it incredulous that I could download the high resolution file of his work. In a previous 12 year chapter, I was a printmaker and retoucher so I have the skills and equipment to make a huge print of the utmost quality from Andrew’s beautiful photograph of the moon (something I will never do, of course).
Andrew went on to say that he didn’t mind about that because he was protected by international copyright law. Furthermore, the digital token had the value, not the photograph itself.
For want of a better phrase, that is screwed up.
NFTs were dead to me from that moment, let alone from what I would find out later.
Incidentally, I see that the NFT page for Andrew’s image has been taken down. A quick scan of his Twitter feed this morning seems to show that he’s concentrating heavily on print sales. Perhaps he’s had a rethink? I do hope so.
Anyway, back to those digital tokens…
NFTs seem to be secure and un-hackable because the tokens are maintained across tens of thousands of servers dotted about the planet.
Although they may be secure NFTs are by no means risk-free.
That string of computer code will stay there for as long as the company hosting it is still in business and/or for as long as the link to that code is still pointing ‘in the right direction’ to associate it with you and your transaction.
As Andy Barnham writes in his very comprehensive article on NFTs:
“The owner of a domain could either redirect the URL to point elsewhere or could simply forget to pay their hosting bill which would result in the disappearance of the URL altogether, resulting in an expensive 404 Page Not Found.“
In summary, people who buy NFTs aren’t buying the artwork itself, nor do they have any rights to the artwork.
They are buying a unique digital token associated with the artwork and the transaction. Although ‘secure while it is secure’, the mechanisms around that transaction could fail at any time for a plethora of reasons.
With me so far?
Good. But now you need to make sure you’re sitting down because it’s about to get dark, very dark.
We’re in the midst of a climate crisis, right?
A climate crisis.
Remember the tens of thousands of servers I mentioned earlier? They use a lot of energy.
So much energy that analysts estimate the average NFT consumes 75 kWh in its lifetime (with all transactions taken into account).
And again, a little more simply:
75 kWh of electricity for one NFT
That’s the same amount of electricity consumed by the average UK home in one week!
JANUARY 2022: ENERGY CONSUMPTION UPDATE
I thought it would be interesting to revisit the Ethereum energy consumption statistics I first published above as I knew they would have increased.
However, I got of a fright when I saw how their footprint is looking now:
You’ll hear people saying but Ethereum 2.0’s coming soon but that’s been promised for years and it’s not here now!
At the time of writing, Ethereum remains 100% Proof of Work, the system that creates the heinous statistics above.
You’ll also hear people talking about Proof of Stake as an alternative.
It’s true, PoS is much more energy efficient than PoW but it’s littered with its own problems and doesn’t negate the catastrophe being created by Ethereum right now, today.
In short, it simply isn’t good enough to say “it will be alright in a few years” when the biggest problems are here now.
If you were going to hit a wall at 100mph in 1 minute’s time, would you feel better if you were told the wall will be removed in 2 minutes’ time? I’m guessing not.
Anyway, back to October’s words…
And check out this article published just yesterday at bitcoin dot com, kindly sent to me by Andy Barnham. A paragraph reads:
“In an effort to explain why Kazakhstan is considering imposing restrictions on new cryptocurrency mining operations, the Ministry of Energy told local media that data centers minting digital coins use 5 megawatts (MW) of electricity each hour. Just a single mining facility burns an average of 3.6 million kilowatts (kW) a month, the department stated, noting that the amount equals the consumption of 24,000 homes.”
I find all these statistics incredibly alarming and very few people in the art world seem to be joining the dots.
For example, take JR’s recent excitement in announcing his grand entrance into this new technology:
ASIDE: It pains me to write this as I hold JR in high esteem, not least as he’s been a huge influence on a new dimension to my own work during the pandemic. This week, I was very disappointed to learn of his foray into NFTs.
As JR’s tweet says, his NFT page is live here where the concept is described thus:
“…the artwork has been divided into 4,591 Greetings from Giza NFTs, each showing a unique detail of the work made up of black and white shapes.”
So, it’s not just one NFT — it’s one artwork split into 4591 NFTs. The cost of each NFT is $250.
If the energy figures I’ve found so far are correct, this means:
4591 NFTs x 75 kWh = enough electricity to power an average UK home for 88 years!
JR says that his NFTs are powered by Palm, whose site contains this information (bear in mind that ‘gas’ doesn’t refer to the fossil fuel but to further jargon for another type of transaction):
“Palm is a new NFT ecosystem for culture and creativity, built efficiently with Ethereum. The Palm ecosystem features low gas costs, fast transaction finality, and is over 99.9% more energy efficient than Proof of Work systems.“
But I’ve found other up-to-date sources like this that say:
“Ethereum has plans to change its proof-of-work algorithm to an energy efficient proof-of-stake algorithm called Casper. This change would minimize energy consumption and will be implemented gradually according to the latest roadmap. For now, Ethereum is still running on proof-of-work completely.”
In better news, I’ve stumbled across the great example set by Joanie Lemercier, an artist who’s realised the impact of his actions and changed his behaviour to less impactful methods.
The article on Wired reads:
“The culprit was Lemercier’s first blockchain “drop.” The event involved the sale of six so-called nonfungible tokens, or NFTs, which took the form of short videos inspired by the concept of platonic solids. In the clips, dark metallic polyhedrons rotate on loop and glisten—a reference to Lemercier’s installations in the physical world. The works were placed for auction on a website called Nifty Gateway, where they sold out in 10 seconds for thousands of dollars. The sale also consumed 8.7 megawatt-hours of energy, as he later learned from a website called Cryptoart.WTF“
The piece continues:
“After learning about his carbon footprint, Lemercier canceled two planned drops, which had been tentatively priced at $200,000.“
As I mentioned right at the start of the article, the concept of NFTs is a hot topic and its popularity is sky-rocketing, along with its energy consumption:
Imagine what this sudden increase in energy consumption means for the planet while we’re in the midst of a climate crisis.
It’s absolutely catastrophic.
In between hearing so cool, incredible and awesome in that interview with Alex Atallah earlier, there didn’t seem to be space to mention this fatal environmental and social impact.
It seems that some of the companies who run and maintain the blockchains are very aware of their environmental impact and therefore endeavour to highlight that they’re using renewable energy to power their operations.
I’ve found that greenwashing is rife, even down to companies referring to their blockchain as an ecosystem, as if giving the impression from the outset that the whole NFT arena is green from the ground up.
This couldn’t be further from the truth.
Such is the power consumption from the servers maintaining cryptocurrency blockchains (NFTs are a cryptocurrency) that it’s heavily contributing to global power shortages — so much so that dormant coal mines are being reopened across the globe in a sprint for cheap energy.
Not only that, but the working conditions are often so dangerous (particularly in the illegal mines that are reopening) that there are hundreds of deaths as a result.
To put it bluntly, cryptocurrencies are contributing so massively to the unprecedented spike in energy consumption that hundreds of people are dying in the scramble to produce the energy required to run the servers.
Never mind all the arty bollocks and general guff around NFTs, what about the energy consumption and deaths of hundreds of miners?
I read a reply to a tweet recently (I can’t locate it now) which defensively said something along the lines of:
“NFTs are the best thing I’ve ever done for my family.”
I wonder if that would include his grandchildren and great grandchildren, or the families of all those miners who are currently dying around the world trying to serve the needs of the few who refuse to look beyond the end of their nose in pursuit of a quick buck?
We need to break this cycle.
Keep on thinking about alternatives. There are a myriad of other options open to us. Some of them are described within these pages and, in many cases, previously tried and tested ways remain the best.
Of course, every method of earning a living from our creations will have an impact of some kind but very few will bear such a level of guff, greenwashing, social and environmental impact as NFTs.
The emperor’s new clothes? Yes.
A house of cards? Certainly.
To anybody trading NFTs or planning to enter the arena for the first time, I implore you to stop.
Nature knows nowt about money and this is just a new way to torture the planet.
Earth is the only home we’ve ever known and NFTs are one of the last things it needs right now.
Two articles I discovered a few days after writing this post, which galvanised everything for me, bringing a neat full-stop to a hectic week:
- NFTs Weren’t Supposed to End Like This by Anil Dash, co-creator of NFTs
- Here is the article you can send to people when they say “But the environmental issues with cryptoart will be solved soon, right?” by Everest Pipkin
- Proof of stake is a scam and the people promoting it are scammers from Yanmaani’s Blog
- The Case Against Crypto by Martin O’Leary
You might also like to read the blog post I wrote a few days later called Response from ART3 about NFTs — my open correspondence with The British Journal of Photography about their venture into NFTs.
Excellent article Jack,
The crazy world we live in.
Thank you, Gavin.
Good article Jack. NFT is another reason why I think t’interweb is skewed/screwed by narative control. Sorry, did you mentioned a climate crisis?
Thank you, Tom. And, boy, have you seen the internet develop since its dawn!
PS Climate crisis? What climate crisis. Tee hee.
So if I sell a b&w print to someone for £500 but sell the ownership rights to the © of that print for £5000 to someone else along with the original negative, both transactions detailed in writing in the form of physical contracts, and both ‘customers’ happy with the arrangement, then those contracts & neg placed in physical solid steel safes, have I replicated an NFT without killing miners and screwing the planet? The neg can be traded contractually as ‘ownership’ but the print remains as a ‘link’ to it and can itself be ‘traded’. Or am I missing something?
So if I sell a b&w print to someone for £500 but sell the ownership rights to the © of that print for £5000 to someone else along with the original negative, both transactions detailed in writing in the form of physical contracts, and both ‘customers’ Aware of, and happy with the arrangement, then those contracts & neg placed in physical solid steel safes, have I replicated an NFT without killing miners and screwing the planet? The neg can be traded contractually as ‘ownership’ but the print remains as a ‘link’ to it and can itself be ‘traded’. Or am I missing something?
You’ve got it, John. But you’ve gone one better because both parties also receive something tangible as part of the contract that they can hold in their hands and even hang on the wall.
Interesting read. For another view on the energy use of this industry, and the particular MSM fud around bitcoin have a watch of this great video for another take. Would be interesting to hear your thoughts..
Thank you, Darren. I’ll have a watch through the week and get back to you.
My mind has been blown. Complexity for complexity’s sake. It’s underworld stuff. Organised crime syndicates have got to be mixed up in this crap. An NFT is a strange and sinister notion. At least to my mind.
I do feel that another level of untold darkness is yet to be revealed, Paul.
You think organised crime doesn’t buy stolen artwork in order to use it as leverage to get fellow criminals out of prison?? Naive…
As far as I can see, Paul is saying what he’s saying and that’s all that he’s saying.
Wonder if you’ve ever considered how inefficient and therefore by extension sustainability negative the world of traditional finance is? The multi trillion industry dealing in both cash (the ultimate climate killer due to being made of either paper or plastic) and probably 10x minimum the amount of servers for the digital side. Then there’s the inefficient supply chain currently in the news formed on the basis of paperwork. Where in its place, Blockchain could improve efficiency by countless magnitudes and reduce fraud (a well known problem in this sector). That supply chain solution would be powered by, yes, NFT technology That’s just a brief counter argument. I implore you to do research outside of NFT art because that’s not where the true value lies. Try reading about IOTA…
Knowing how much went into writing a mere article such as this (along with the ensuing activity), I only have the energy to stick to the world I know. I’m sure there are people in other arenas who are prepared to go to the same lengths as me to bring these issues to the fore. It sounds like you might be just the chap, Henry.
Interesting piece. I was sent a link to it by a mate. I agree with you regarding proof-of-work, it’s terribly inefficient. It’s a shame that Etherium has taken a lead in the area of Art NFT’s- Solana is much better, in fact, that scene is growing fast. It is also counter-intuitive that a smart contract is the store of value whilst the image file is still a separate entity.
Having said that, smart contracts can do a lot of things that image files can’t do, to put it mildly. There is the notion coming through, quite heavily, in your piece that the virtual world and the real world are clearly demarcated and really the virtual world only impacts on the real one in a negative way. Information and Communication Technologies are certainly environmental forces, but in much more complex ways than just energy use.
Yesterday the FDIC Chairman in the US announced that they’re looking at how they can provide a clearer path for banks to hold Crypto assets. They kind of have to, because it’s evolving so fast, and because holding on to fiat currency has been all but worthless for a decade. Meanwhile, thousands of teams are building projects using smart contracts ranging from DeFi to healthcare, cybersecurity, music, real estate etc etc. If I had to bet, I’d say that the “killer app” of the 4th industrial revolution will combine blockchain with AI. I’m absolutely certain that it won’t be disappearing anytime soon.
Obviously, your interest is very specific to photography. But I think this stuff is going to radically alter, again, the whole landscape of photography, along with everything else.
Thank you for your excellent and thought-provoking input, Robbie. It really adds to the picture. My major concern is for these changes to happen soon enough as the pace of growth seems exponential at the moment (take the Kazakhstan story, for example).
If mining operations shift to countries where electricity is cheap, it’s up to local governments to tax it and to use the income to build clean electricity plants. In order to meet whatever international climate agreements they’ve signed (if any). The best you can do as a user is not use anything that’s proof-of-work. And as you say, ignore any greenwashing claims because it’s bullshit.
Just as I thought, and thank you once again.
That’s a huge and disturbing carbon footprint, Jack. It would be interesting to do, or see, a life cycle analysis to compare this with printing and shipping a print. Even with your own traditional process including chemicals, storage via Adobe LR and the Cloud and using my own exorbitant C (and $) costs of shipping out of Canada, I suspect there would be a considerable difference.
I wonder if you realize that the majority of the estimates in this article (if taken from crypto art) are wrong? In a simple way:
Blocks are mined in ethereum regardless of if theyre filled or not. If an NFT is not minted in one block the block is still produced (mined) and the energy is still consumed. Nfts do not “cost as much energy to make as a house in the UK uses in a week” as is often cited. Theres a few other things wrong with the article I could explain if you like but just wanted to point that one out as it’s something I see mentioned a lot.
Just realized this comment sounded a bit rude and condescending I apologise if it sounded that way to you.
No worries, Eso. Thank you for thinking to say so.
Thank you for your comment, Eso. I haven’t intentionally posted any wrong data. I’ve done my best in an arena that I’ve found very hard to discern what’s what. I found the 75 kWh figure to be quite consistent from different angles (see the ‘analysts estimate’ link) and then joined the dots myself, even checking it against my own energy use. Please feel free to help me out here. You’ll be helping others reading it too!
This is very informative, thanks for putting this post together, I will link to this when asked about NFT’s
Thank you, Michael. It’s my pleasure and I’m glad you’ve found it useful.
I’ve just found this excellent article. Thanks for summing the issues with NFT’s up so well, Jack. I’ll share this important piece with others.
Thank you very much, Paul. Most kind.
[…] that they’re as made up as the stock market. For far greater takes and research, read Jack Lowe’s excellent piece, this by Seth Godin and the energy element from Bitcoin News to see how I came to my […]
Thank you for the mention, Alex!