A White House report released Thursday detailing all the steps blockchain can take to improve environmental sustainability has a direct impact on the NFT space. The report argues that blockchains operating under proof-of-work consensus mechanisms — namely Bitcoin and Ethereum — are particularly energy-intensive. With ethereum accounting for “20% to 39%” of global energy usage generated by blockchain, the upcoming ethereum merger could help achieve the drastic reduction in blockchain energy consumption called for by the White House as it moves to proof-of-stake consensus mechanism. The report follows Executive Order 14067 issued in March, which called for the responsible development of this growing technology industry, referred to here as the digital asset industry.
why it matters
It looks like everyone is excited about the upcoming Ethereum merger. Even the White House. As environmental concerns have led to a list of arguments against the further development of blockchain technology, the de facto NFT blockchain’s imminent transition to a proof-of-stake consensus mechanism for verifying transactions recorded on it seems to address its most frequently discussed One of the problems – and the encouragement of future growth. According to a new White House report, it is widely believed that blockchains operating under this consensus mechanism carry “substantially low” risks when scaling up compared to their proof-of-work counterparts. Currently, NFTs are far from the exception to the potential environmental damage of blockchain technology. As detailed in an article by computational artist Memo Akten, each NFT transaction on the Ethereum-powered platform reportedly consumes similar energy to a multi-hour flight. This includes minting coins, which allegedly consume the same amount of energy as a “1-2 hour flight,” Akten said. Of course, that will all change after The Merge. “Each consensus mechanism has advantages and disadvantages. […] Responsible development of digital assets will encourage consensus mechanisms that minimize energy use and environmental impact while maximizing benefits to consumers,” the White House said.
While things are looking up for Ethereum, Bitcoin must follow suit with a greener consensus mechanism. As detailed in the White House report, the U.S. is currently the world’s leading force in bitcoin mining — a position that could become environmentally sustainable in the future. In a worst-case scenario, the White House could follow the lead of countries like China and officially ban all cryptocurrencies — and thus NFTs. However, it should be noted that the CCP’s crypto ban has done little to slow down crypto mining operations in the country. Remember that outright bans are the absolute worst. Taken together, this report can be seen as a gentle reminder from the White House to keep sustainability in mind as blockchain technology continues to go mainstream. As stated in the March executive order, “We must strengthen American leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets,” President Biden said. “The U.S. is interested in ensuring that it remains at the forefront of responsible digital asset development and design and the technologies underpinning new forms of payment […], especially when setting standards that promote: democratic values; the rule of law; privacy; protection of consumers, investors and businesses; and interoperability with digital platforms, traditional architectures and international payment systems. ” But wait, there’s more: