By Gary Symons
TLL Editor in Chief
Environmentalists are demanding corporations stop working with any NFTs that are linked to cryptocurrencies using Proof of Work systems.
According to backers of the Change the Code, Not the Climate campaign, cryptocurrencies like Bitcoin that use Proof of Work systems for create their coins are creating a global warming crisis. They point to data from the University of Cambridge that shows Bitcoin alone currently uses more energy than the country of Sweden.
Even worse, the Change the Code activists cite a report in the journal Nature that found that if Bitcoin becomes widely adopted as a global currency, it could produce enough carbon dioxide emissions to warm the planet above 2 degrees Celsius. That is well above the 1.5-degrees of global warming that was set as a target in the Paris climate accord, and would cause a rise in sea levels, destroy habitats around the world, and create severe weather events.
“This is a big problem. In part because of where the industry stands now but also because of our concerns about its growth,” said Michael Brune, campaign director and former executive director of Sierra Club.
Brune says that intensive computing power has created such a massive drain on energy systems that cryptocurrency mining was banned in China, and in other jurisdictions Bitcoin miners have actually restarted highly polluting coal energy plants to power up their Bitcoin mining arrays.
“Coal plants which were dormant or slated to be closed are now being revived and solely dedicated to bitcoin mining,” Brune said. “Gas plants, which in many cases were increasingly economically uncompetitive, are also now being dedicated to bitcoin mining. We are seeing this all across the country.
“It’s particularly painful to see this in the electric sector because that is precisely the place where the US has made most of its progress in the last decade,” he added. “There’s no way we can reach our climate goals if we are reviving fossil fuel plants.”
But Brune and the Change the Code campaigners say there is technological fix, and they are imploring companies in the licensing sector to make the switch.
The campaign is important to licensing companies because of the huge increase in NFT licensing over the past 18 months. Unfortunately, while an NFT may create negligible climate impacts by itself, the cryptocurrencies used to buy and sell NFTs often do use tremendous amounts of energy, including Bitcoin.
In April, 2021, The Licensing Letter released a special report, The Downside of NFTs, that detailed how NFTs and their associated cryptocurrencies constituted a direct threat to the environment and even to the stability of human civilization.
However, since that article was written, various cryptocurrencies have begun developing software that generate crypto coins using as little as 0.1% of the energy used by Proof of Work systems, or to put it another way, 1,000 times less energy than producing Bitcoins.
The Proof of Work software code that Bitcoin uses requires the use of massive computer arrays to validate and secure transactions. It is used to verify that a Bitcoin miner has solved the extremely complex cryptographic puzzles needed to add to the bitcoin ledger on a blockchain.
Competing cryptocurrency systems like Ethereum – which is widely used in the NFT industry – are now shifting to “proof of stake” – that they believe will reduce its energy use by 99%. In the proof of stake model, miners pledge their coins to verify transactions, while adding inaccurate information to the blockchain leads to penalties.
One of the other companies calling for a switch to environmentally sustainable cryptocurrencies is Ripple, headed by executive chairman and founder Chris Larsen, who calls the energy use of Proof of Work systems a “nightmare scenario” that could negate all of the work being done globally to reduce greenhouse gas emissions.
“Imagine the Saudis sitting on all that oil, which has a cost of about ½ cent per kilowatt hour – no renewable can match that,” Larsen said. “Bitcoin mining could be this endless monetization engine for fossil fuels. That would be a nightmare.”
The Change the Code campaign launched this week with digital advertising in the Wall Street Journal, New York Times, Marketwatch, Politico, Facebook and several other publications.
Organizers from several environmental groups are also taking legal action against proposed mining sites and using their large memberships to push bitcoin’s biggest investors and influencers to call for a code change. Those influencers include the world’s licensors, many of whom have launched successful NFT programs over the past year.
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