A report released a week ago by the White House calls for every blockchain to adopt a measure that would make them environmentally friendly.
NFTs have been signed out as a predominantly energy-hungry corner of the blockchain realm. The non-fungible tokens do not cause any environmental effects themselves, but the energy required to generate them does.
Many NFTs are also minted using the proof-of-work (PoW) protocol, which utilizes massive amounts of energy to mint new tokens.
It also has been said that a single piece of that cryptocurrency art utilizes as much energy as an art studio in two years. Nonetheless, there are more eco-friendly ways to generate NFTs. A new report coming from the White House is wishing the NFT realm to adopt them.
Energy and Climate Effects of Cryptocurrency in the United States
The report, in the initial week of September, requests calls for every blockchain to take necessary measures that would make them environmentally friendly.
It also claims that blockchains that use the proof-of-work mechanism, like Ethereum and Bitcoin, are particularly energy-intensive. For instance, Ethereum is estimated to utilize twenty percent to thirty-nine percent of the overall energy utilized by all blockchains.
The move to proof-of-stake (PoS) could help lessen the energy consumption of Ethereum by about ninety-nine percent. Fortunately, after the Merge, Ethereum will substantially shift.
What About the Environmental Consequences of Bitcoin?
Things may be seeking up for Ethereum. However, what about the most sought-after cryptocurrency, Bitcoin? Unluckily, the report is not as optimistic when we talk about Bitcoin
The report also mentions that the US is the top force in Bitcoin mining. Suppose American miners wish to stay ahead of the curve, then they should begin using more eco-friendly mechanisms.
In the worst-case scenario, the American government may follow the initiatives of China to ban all things crypto. That would be a huge blow to the industry and could also have a ripple effect globally, even though it is worth observing that China’s ban did not do much to slow down the mining operations.
How Can the Blockchain Monitor the Climate Change?
There are numerous critics of blockchain technology regarding climate change, but the White House report mentions that the technology has the potential to play a crucial role in environmental markets.
Particularly, it’s mentioned that distributed ledger technology could allow the coordination of broader supply chain management and distributed energy resources.
In short, the government perceives the potential for blockchain technology to help combat climate change and not contribute to it.
What’s Next?
Things are looking up for Ethereum, but Bitcoin should follow suit in adopting an eco-friendlier consensus mechanism. As thorough in the report from the White House, America is currently the leading force in Bitcoin mining in the world—a spot that may become environmentally sustainable throughout the world.
At worst, the White House may also follow the creativities of nations such as China in officially banning all things crypto, in exchange, NFTs. Nonetheless, it must be noted that the crypto bans of CCPs have barely slowed down crypto-mining operations in the nation.
Bear in mind that an outright ban is a complete worst-case scenario. Everything considered the report can be perceived as a gentle reminder from the White House to always keep sustainability in mind as blockchain technology remains to go mainstream.
As mentioned by the March Executive Order, they should reinforce the American leadership in the global financial system and in economic and technological competitiveness., including through the responsible development of digital assets and payment innovations.
President Biden also explained that America has an interest in making sure that it stays at the forefront of responsible development and design of digital assets and technology, which underpins new forms of payments, especially in setting standards that support investors and businesses, the protection of consumers, democratic values, the rule of law, privacy, legacy architecture, and interoperability with digital platforms.
Where From Here for the NFT Industry?
The government allotted Executive Order 14067 in March that called for the responsible development of the budding sector. The White House is also following up on what particular measures could help make the whole NFT space sustainable.
Outright outlawing the technology or specific aspects of it would be a great setback. However, the NFT industry could continue to develop while being more environmentally friendly with the proper measures in place.
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