United States:
Play Greener: Solutions To Offset The Environmental Impact Of Videogame NFTs
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The potential applications of non-fungible tokens (NFTs), like blockchain technology in general, are
attracting attention across the economy. Some early projects by
mainstream videogame publishers have been met with mixed reviews,
but adoption shows no sign of slowing down. But like blockchain
technology in general, NFTs, including in videogames, cause
environmental concerns because of the energy required to create,
transfer, and track them. A number of factors can influence NFT
energy consumption, but a single NFT can generate more carbon
dioxide than driving for 500 miles1
(and every subsequent transfer of the NFT would generate
incremental emissions). Coupled with research that shows 66%
of gamers are more likely to play games that are socially and
environmentally responsible,2 it is
evident that game studios have not only a values-based but also
commercially-driven conundrum on their hands when deciding whether
and how to introduce NFT marketplaces into their products.
Fortunately, there may be ways for the world to “play
greener.”
Game studios can choose to support NFT transactions with
“proof-of-stake” blockchain protocols, which are more
environmentally friendly than “proof-of-work” protocols
(currently used by Ethereum and Bitcoin). Proof-of-work blockchains
secure transactions by requiring crypto miners to solve
computationally-intensive problems which results in significant
energy consumption while the proof-of-stake chains secure
transactions with much less energy by requiring miners to
“stake” their own resources to validate the chain. In
fact, there are plans for Ethereum to transition to a
proof-of-stake protocol that could result in a huge reduction
in energy usage.3 That transition
has been plagued by delays and may or may not happen sometime in
2022. In the meantime, there are many proof-of-stake
technologies that can be used to support NFT transactions
in-game.4 Executives will need
to assess whether these blockchain projects have sufficient
consumer adoption, among other factors.
Utilizing proof-of-stake technology is insufficient by itself to
cure the environmental issues faced by NFTs—Ubisoft received
backlash despite using choosing the PoS platform Tezos over
Ethereum.5 Some enterprises
invest in building renewable energy sources to power
servers in order to offset carbon emissions and deliver cost
savings.6 Alternatively, companies
can offset their growing carbon footprint by purchasing and
retiring renewable energy certificates (RECs) from renewable energy
facilities. Doing so will compel utilities to add more renewable
energy generation to the grid to meet regulatory requirements as
the world continues to push for the decarbonization of the electric
power sector. The Green-e® certification program7 can be a potential resource for
purchasing RECs with verified environmental attributes and
validating sustainability messaging in marketing and PR.
Footnotes
1. The Unreasonable Ecological
Cost of #CryptoArt (Part 1),
https://memoakten.medium.com/the-unreasonable-ecological-cost-of-cryptoart-2221d3eb2053,
(last accessed January 11, 2022).
2. 66% of Gamers More Likely to
Play Socially Responsible Games,
https://www.gamesindustry.biz/articles/2021-04-29-66-percent-of-gamers-more-likely-to-play-socially-responsible-games,
(last accessed January 11, 2022).
3. Ethereum’s Energy Usage
Will Soon Decrease by ~99.95%, Ethereum Foundation,
https://blog.ethereum.org/2021/05/18/country-power-no-more/, (last
accessed January 11, 2022).
4. Types of Blockchains: PoW,
PoS, and Private, Gemini,
https://www.gemini.com/cryptopedia/blockchain-types-pow-pos-private#section-proof-of-stake-blockchains,
(last accessed January 11, 2022).
5. After Backlash, Ubisoft Calls
Gaming NFTs a ‘Major Change That Will Take Time’,
https://decrypt.co/88880/after-backlash-ubisoft-calls-gaming-nfts-a-major-change-that-will-take-time,
(last accessed January 11, 2022).
6. Google Buys 50MW of Wind Power
for German Data Centers,
https://www.datacenterknowledge.com/energy/google-buys-50mw-wind-power-german-data-centers,
(last accessed January 11, 2022).
7. Green-e,
https://www.green-e.org/.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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