Post-Merge Carbon Footprint Analysis and Sustainability in the NFT Art Market

Round 1

Reviewer 1 Report

This is a very clear and effective exploration of the environmental consequences of NFT art and the ways to lessen the environmental impact of such works. The discussion of Ethereum's Merge and the transition from Proof of Work to Proof of Stake was excellent and clear and the broader conversation about other alternatives to reduce carbon impacts of NFTs was pretty comprehensive and introduced positive impacts as well as potential drawbacks in each case. This is really useful for beginners in discussions of NFTs environmental impact. In brief, this article very ably covers its topic in relatively clear language, providing invaluable insights for those not savvy about blockchain and NFT energy use, its limitations, and possible ways to improve it in relation to the market for Art NFTs. It serves an important role in the literature.

However, there are a couple of areas that could use clarification to make the article more effective.

Lines 91-94 This is confusing. I think you mean the average total value of NFT sales is $78 million (because the specific numbers listed are both higher and lower) but I do not understand if this is a measure of a month's sales or a day's--does this value count all of the transactions of the previous month or just the sales on the 15th? Anyway--rephrase this sentence to make clear what is being measured and what kind of variation is being referenced.

In section 2.1, say lines 117-129, the author/s are trying to explain the environmental impact of NFT creation, sales, and storage through blockchain technology. But the measures they list are not entirely consistent and clear. This is the key to the whole piece so it is crucial to get this right. In one paragraph, they discuss 150 million trees would be needed to offset NFT energy consumption in one year and , in the next, they say that NFTs generate enough pollution to kill a human. Both of these are stark assessments but they are not commensurate and they don't tell us what we need to know exactly. In a later paragraph they compare Ethereum's energy use after the Merge to approximately that of the Faroe Islands (this would seem small). I think that among environmentalists working on climate mitigation, the use of gigatonnes of CO2 is the common measurement and this would provide useful comparisons to other industries', or countries', energy use. This is more tangible than the number of trees, or human death by pollution which is not really a measure of CO2 but a more problematic assessment of how CO2 levels increasing can have negative impacts on human health. Please try to reframe these measurements in consistent and comparable ways.

Author Response

Point 1: Lines 91-94 This is confusing. I think you mean the average total value of NFT sales is $78 million (because the specific numbers listed are both higher and lower) but I do not understand if this is a measure of a month's sales or a day's--does this value count all of the transactions of the previous month or just the sales on the 15th? Anyway--rephrase this sentence to make clear what is being measured and what kind of variation is being referenced.

Response 1: Thank you for pointing out the confusion in lines 91-94. I apologize for the oversight. I have revised the sentences for clarity:

Upon delving into the expansive realm of the NFT market, a particular emphasis on the art segment reveals intriguing fluctuations in sales values across distinct timeframes. Spanning from April 2021 through July 2023, the financial trajectory of NFT art sales traversed a dynamic landscape of highs and lows. As of April 15, 2021, a retrospective analysis of the preceding 30-day period unveiled an aggregated sales figure hovering around a notable 78 million U.S. dollars. This figure crescendoed to an impressive peak of nearly 881 million U.S. dollars by September 15, 2021. However, the ensuing period witnessed a tapering momentum, culminating in a subdued figure of approximately 14 million U.S. dollars by July 15, 2023, encapsulating the sales over the trailing 30-day window (Statista, 2023).

I hope this clarifies the data presented and provides a clearer understanding of the sales trends of NFT art over the specified duration.

Point2: In section 2.1, say lines 117-129, the author/s are trying to explain the environmental impact of NFT creation, sales, and storage through blockchain technology. But the measures they list are not entirely consistent and clear. This is the key to the whole piece so it is crucial to get this right. In one paragraph, they discuss 150 million trees would be needed to offset NFT energy consumption in one year and , in the next, they say that NFTs generate enough pollution to kill a human. Both of these are stark assessments but they are not commensurate and they don't tell us what we need to know exactly. In a later paragraph they compare Ethereum's energy use after the Merge to approximately that of the Faroe Islands (this would seem small). I think that among environmentalists working on climate mitigation, the use of gigatonnes of CO2 is the common measurement and this would provide useful comparisons to other industries', or countries', energy use. This is more tangible than the number of trees, or human death by pollution which is not really a measure of CO2 but a more problematic assessment of how CO2 levels increasing can have negative impacts on human health. Please try to reframe these measurements in consistent and comparable ways.

Response 2: Thank you for pointing out the inconsistencies in the environmental impact measurements of NFT creation and sales through blockchain technology. I understand the need for a more coherent and universally accepted metric for environmental impact, such as gigatonnes of CO2. I will be reframing the measurements to provide a clearer and more consistent picture of the environmental effects of NFTs. Additionally, I acknowledge the concern raised about comparing NFT pollution to human death, which indeed is a problematic representation of CO2's impacts on health. I will be addressing this in the revisions as well.

Reviewer 2 Report

Line 31- In the first line of the article, the author introduces a common confusion: NFTs are digital assets and do not necessarily qualify as their own digital asset class--whether clarifying this is necessary, I am not sure.
Line 36- NFTs differ from other cryptocurrencies, and the use of NFTs for art serve several purposes, ie from provenance to sales mechanism.
In the opening paragraph the distinction bw an NFT and "NFT art" should be clarified.
Line 38 - The market for NFTs is diverse, but it's not bc the markets--art, collectibles, games, metaverse, and "utility"-- are inherently distinguishable (they are not and much is debated about how to differentiate them in annual reports) but how NFTs move in those spaces that presents the diversity of uses in the market. This is a subtle but important distinction that should be presented up front as an extension of the issue identified on line 36. Also, perhaps clarify what is meant by 'utility'
To say that NFT art is only 10% of the market and then to say that it is significant in back to back sentences (l 39-41) is confusing. It is also worth mentioning that the distinction between art and collectibles is highly debated, and that this confuses the numbers -- this should at least be acknowledged. To speak of the market in paragraph 2 and not address the crash in the NFT art market in 2022 is bizarre.
Line 46 - Opensea has differences to Nifty Gateway and Superare that should be briefly mentioned (aggregator, access, etc)
Line 52-3 Ethereum significantly altered its greenhouse has emissions in September 2022 -- should be mentioned to set stage for what the problem still is.
Section 1 NFT Art Market -- this is out of date. Discussing what happened in 2021-2022 should be contextualized by the previous period of 2017-2020 when artists like Kevin and Jennifer McCoy did a project with the Whitney, or major new media artists like Eve Sussman experimented, etc. Then, the cryptocurrency crash in 2022 should be addressed to discuss how/why that impacted the NFT art market, and how/if it impacted established artists who produce projects given that, for example, Artist Rights Society launched Arsnl -- in other words the NFT art market represents a burgeoning market of artists and collectors focused on crypto and a contemporary art market with media/digital artists who have established/ongoing practices. This should be clarified in this section.
Line 75-80 -- artists were the first people who addressed the environmental impact of proof of work NFTs so to miss saying that misrepresents the force that art has been in this space.
Line 89- if NFT art is 10% of the market as mentioned earlier in the paper, then that could be the number used in subsequent para to identify the carbon impact. I don't understand why this was not done.
Line 109 - Ethereum is no longer proof of work making this sentence a blatant inaccuracy.
L 114- The Merge occurred September 2022 so I don't understand why the sentence starting "before the merge" is using citational reference for Ethereum calculations in February 2023.
L118 and 120 cite Memo Akten in an article on Medium where he expressly states at the beginning that the numbers below are no longer accurate because of the Merge! So the cited numbers do not apply to a post-Merge context. Though this section is titled Eco cost of Proof of Work Mechanism, the focus on Ethereum and the opening sentence stating Eth is Proof of Work is blatant misinformation, which the author clearly know because they have mentioned the Merge and next discuss Proof of Stake. This whole section would need to be reworded in order to clarify the focus on Proof of Work in Bitcoin (which has Ordinals as a form of NFT that the author never mentions) and Ethereum before August 2022. To have the last paragraph of this section discussing NFT transactions using Eth in January 2023 makes NO sense since that would be after the merge.
L 126 claims that 51,877 transactions would produce enough emissions to kill a human. This is the kind of clickbait stat that decontextualizes information to generate outrage. To explain how this would work to kill a human and compare it to other kinds of human technologies that likewise impact environment, health, and mortality would be necessary, but also deviate from the focus of this article which seems to be about art and nfts but is now speaking more generally about NFTs without using any of the previous stats to orient the numbers to ‘art.'
L131 Ethereum did not switch bc of “environmental impact of NFT art transactions” this implies far too great a significance on art. It had been in plan for several years, repeatedly delayed. However, artists being agitators about the environmental impact of Eth as proof of work is believed to have encouraged progress towards the merge.
Page 4 — comparing carbon footprints is difficult as Memo Atken and others have written and so saying line 150 that the Faroe Islands can be compared is blithe and leads to inaccurate understanding of the complex issues surrounding carbon measures.
Line 164-172 If going to compare Eth to Mastercard transactions then really should explain how carbon measures are done and then explain why this comparison is helpful in an art context. Do a lot of art sales happen on Mastercard? What is the point of this comparison?
Line 179 It is unclear that the demand for NFT art is on the rise. If there is a demand for NFTs, it seems to largely appear in the gaming sector. Also all cryptocurrency trades, whether in PoW or PoS, have a a carbon impact and those significantly overshadow art. So, it is not the demand for Art that necessitates considering this impact as other sectors play a far greater role. Therefore the author needs to more clearly state why this issue matters so much within mainstream contemporary art (and why NFT might matter more than addressing attendance at art fairs, which remains hugely contested).
Section 3.1.1 If going to consider Carbon Offsetting, would encourage author to use an example beyond Beetle where the artist integrated carbon offsetting or sequestration into the project— there are many.
Section 3.1.2 If going to consider Carbon collectible, would encourage author to examine how that has been done by art projects as several have considered this, most notably Sven Eberwein who should be known to the author given the author’s reference to Chia later in the paper.
Section 3.1.3 the section on problems with carbon neutrality is good but there is no mention of how/when this has been used by an artist or project to anchor its relevance. Is this a common claim? Should be made clearer.
Section 3.2 Lazy Minting garnered a lot of attention in 2021 when artists were outspoken about the environmental impact and some citations to that moment would helpfully anchor this section in art.
Section 3.3 on alternative blockchain systems is too long and lacks clear application to art contexts. I would recommend condensing it in order to ensure the article doesn’t devolve into an extended Medium article on blockchain options.
Section 3.4 I would lead with the Gallery Climate Coalition as they have been discussing art and blockchain since spring 2021 and are most involved in art world issues among those presented.
Line 436 Memo Akten does not actively track carbon emissions and specifically stepped back because of some concerns about how the information he had shared had been used.
Section 3.5 Given the shift to PoS, the section on policy initiatives seems odd. This is the kind of paragraph where the article seems confused about its primary purpose. Is it discussing art (does not seem sufficiently like it is)? Or, is it addressing the general environmental issues with NFTs?
Sections 3.5.1-3.5.3.4 become bogged down in policy and regulation challenges, almost entirely losing sight of how this impacts art. It is mostly accurate information but is not being tied to art. The section 3.5.3.5 NFT Art Transaction Taxes Based on Carbon Footprint has no citations but it could be usefully expanded to explain how this would work for decentralized platforms, etc.

Overall, this article needs to be seriously revised and grounded in art. It is unclear if the author is adequately familiar with the many, many art projects around this topic, let alone the extensive published materials on art/blockchain/environment over the last two years (as well as material prior to 2021). If the author is not, they may struggle to rewrite this as needed and should consider removing the claim to focus on art.

fine.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Round 2

Reviewer 2 Report

Overall some important grammar and stylistic edits are needed to ensure sentence clarity and structure— the rapid edits led to some inconsistent spelling/syntax, repeated word usage, as well as missing words. The bibliography has some strange errors, and the author should in the future seriously consider including more art-based articles and scholarship. Editors should clarify if this is a chapter or an article— I assumed it was for a journal and thus an article. I am not sure why the author presumes my involvement with the Gallery Climate Coalition— it’s presumptuous and inappropriate…also in this case inaccurate.




Line 42-44    For instance, while some NFTs might be collectibles in the art world, others could provide special access or features in games or virtual worlds, showcasing their 'utility' or practical application.
NFTs that are collectibles often also serve other purposes, such as showcasing utility — that’s the point to make. The same NFT can be a valuable art object to be auctioned at Sotheby’s and provide entry to parties, a source of provenance, etc…
Lines 134-135 The NFT art market's popularity and growth worsen the world carbon emission 134 problem, thus it's important to study its carbon footprint, to reduce its environmental im- 135 pact and promote sustainability.
One would think that cryptocurrency trading or gaming usage would be a more significant impact so should explain why the focus on art.
Line 146 — first mention of the merge and many won’t know what that is. Also unclear how before it is continuing— rewrite sentence?
Line 281-285 seem odd— this point has been made or should be put earlier in the article.
Line 286. I don’t understand this paragraph’s first sentence.
Lnie 295 — the concept is not only applicable to artists using NFTs, it has been done by artists. Why not mention an example to show its effectiveness, or lack of significance?
Line 362-364 cut this sentence since other researchers have shown that VCS are not in fact adequate.
Line 384 — NFT paintings?
Line 385 — explain why unsold minted NFTs are problematic.
Lines 386-392 - many of these sentences seem weirdly repetitive
Line 450 I don’t understand this: This de- 450 crease in energy use may lower NFT artwork production
Line 484— I am not clear why "Creators and dealers should mint and exchange NFT art on Layer 2 platforms…” Why the should? It seems forceful in a way that hadn’t been made clear to me.
Line 490 — correct artist name Memo Akten  — also he has largely denounced his earlier findings because of the problems with calculations. Kyle McDonald has some new numbers that are probably better for future work on this topic.
703 — not sure the bibliography substantiates references to scholars. Perhaps use another word.

Overall some important grammar and stylistic edits are needed to ensure sentence clarity and structure— the rapid edits led to some inconsistent spelling/syntax, repeated word usage, as well as missing words. The bibliography has some strange errors.

Author Response

Point 1: Line 42-44  For instance, while some NFTs might be collectibles in the art world, others could provide special access or features in games or virtual worlds, showcasing their 'utility' or practical application.

NFTs that are collectibles often also serve other purposes, such as showcasing utility — that’s the point to make. The same NFT can be a valuable art object to be auctioned at Sotheby’s and provide entry to parties, a source of provenance, etc…

Response 1: Regarding your first point, I understand that your contention is centered around the multi-dimensionality of NFTs, particularly how a single NFT can simultaneously serve as a collectible art piece while offering utility features. I concede that the line in question may have unintentionally conveyed that NFTs exist strictly in isolated realms, either as collectibles or utility tokens, when in fact they can exist as both.

Point 2: Lines 134-135 The NFT art market's popularity and growth worsen the world carbon emission 134 problem, thus it's important to study its carbon footprint, to reduce its environmental im- 135 pact and promote sustainability.

One would think that cryptocurrency trading or gaming usage would be a more significant impact so should explain why the focus on art.

Response 2: I am indebted to you for underscoring the need for contextual clarity in Lines 134-135. Indeed, your point is well-founded; cryptocurrency trading and gaming are substantial contributors to the world's carbon emissions. However, the growing popularity of the NFT art market, specifically its exponential expansion and high-frequency transactions, amplifies its carbon footprint considerably. Moreover, the sociocultural prominence that NFT art has recently gained positions it as a highly visible and influential sector, thereby creating a persuasive channel for promoting environmental awareness and sustainability.

Point 3: Line 146 — first mention of the merge and many won’t know what that is. Also unclear how before it is continuing— rewrite sentence?

Response 3: I appreciate your discerning feedback regarding Line 146, specifically your insight into the potential ambiguity surrounding "The Merge." Acknowledging the necessity for clarity, the revised section now elucidates the term while retaining its complexities, aiming to eliminate any reader bewilderment.

Point 4: Line 281-285 seem odd— this point has been made or should be put earlier in the article.

Response 4: Thank you for your astute observation regarding the redundancy of Lines 281-285. I concur that the introductory remarks seem repetitive when considering the preceding sections that already delve into the environmental implications of NFTs. In light of your valuable feedback, the introductory lines for Section 3.1.2 will be revised to function as a segue that builds upon the prior discussions in Sections 3.1 and 3.1.1, while also setting the stage for the innovations in carbon-offsetting within the NFT art sphere that are to follow.

Point 5: Line 286. I don’t understand this paragraph’s first sentence.

Response 5: Thank you for pointing out the ambiguity in the initial sentence of line 286. I agree that it could benefit from greater clarity. I have revised the sentence to better articulate the role of specialized tokens, like Carbon Collectible NFTs, in offsetting the carbon footprint of NFT art transactions.

Point 6: Lnie 295 — the concept is not only applicable to artists using NFTs, it has been done by artists. Why not mention an example to show its effectiveness, or lack of significance?

Response 6: Thank you for your astute observation on line 295. I concur that the presentation of a concrete example would significantly augment the reader's understanding of the potential applicability of these carbon-offsetting mechanisms within the realm of NFT art. Accordingly, I have included a case study featuring the artist Sven Eberwein's collaboration with Offsetra in creating the first carbon-neutral NFT, exemplifying how carbon credits and blockchain can intersect to make digital artistry both sustainable and groundbreaking. This should address the concern you've raised, and I appreciate the opportunity to enhance the depth of the article.

Point 7: Line 362-364 cut this sentence since other researchers have shown that VCS are not in fact adequate.

Response 7: I am indebted to you for your keen scrutiny of lines 362-364, particularly your note regarding the prevailing skepticism around the effectiveness of Verified Carbon Standards (VCS). The concerns about the rigor of these standards merit a conscientious reevaluation, and as such, I am amenable to excising the sentence in question. I will replace it with an objective discussion that encompasses both the optimistic views and critical perspectives on carbon offset standards, thereby providing a more nuanced and comprehensive analysis. Thank you for providing this invaluable input, as it enriches the quality of discourse on this subject within the article.

Point 8: Line 384 — NFT paintings?

Response 8: Thank you for pointing out the specificity of the term "paintings" in Line 384. You are correct that the scope of NFTs extends beyond just paintings and encompasses a broader range of artistic forms. To more accurately represent the diversity of digital artworks that can be minted as NFTs, I have amended the sentence to replace "NFT paintings" with "NFT artworks." This should eliminate any unintended limitations implied by the original phrasing.

Point 9: Line 385 — explain why unsold minted NFTs are problematic.

Response 9: I appreciate your observation on Line 385, which underscores the need to elucidate why unsold minted NFTs pose an environmental problem. While the text alludes to their occupation of blockchain space and contribution to pollution, it appears that further clarification could enhance the reader's understanding of the issue. Unsold minted NFTs not only occupy valuable storage space on the blockchain but also necessitate energy-intensive computations for their creation, thereby exacerbating the carbon footprint of the NFT ecosystem.

Point 10: Lines 386-392 - many of these sentences seem weirdly repetitive

Response 10: I appreciate your feedback on lines 386-392, pointing out the apparent repetitiveness in my explanation of lazy minting. Upon reflection, it's clear that the text could be more concise while still thoroughly explaining the concept and its environmental implications. Thank you for drawing my attention to this issue.

Point 11: Line 450 I don’t understand this: This decrease in energy use may lower NFT artwork production

Response 11: Thank you for your observation regarding line 450, specifically the phrase "This decrease in energy use may lower NFT artwork production." I realize that the sentence may not have been clear in articulating the intended point, which is that the reduced energy consumption facilitated by PoST may result in a lesser carbon footprint for the minting and trading of NFT artworks, rather than affecting the volume of NFT artworks produced. I apologize for the lack of clarity, and I appreciate the opportunity to amend the text for better comprehension.

Point 12: Line 484— I am not clear why "Creators and dealers should mint and exchange NFT art on Layer 2 platforms…” Why the should? It seems forceful in a way that hadn’t been made clear to me.

Response 12: I appreciate your keen attention to the nuance in the language used in line 484, specifically the imperative tone in "Creators and dealers should mint and exchange NFT art on Layer 2 platforms." The intent behind this assertion was to underscore the relative environmental benefits of utilizing Layer 2 platforms for NFT activities as opposed to traditional Layer 1 platforms. However, I acknowledge that the statement could be construed as overly prescriptive without sufficient contextual backing in the narrative.

Point 13: Line 490 — correct artist name Memo Akten  — also he has largely denounced his earlier findings because of the problems with calculations. Kyle McDonald has some new numbers that are probably better for future work on this topic.

Response 13: Thank you for pointing out the error in the artist's name and the updated information regarding Memo Akten's revised stance on his earlier findings. I agree that using the most recent and accurate data is crucial for the integrity of this work.

Point 14: 703 — not sure the bibliography substantiates references to scholars. Perhaps use another word.

Response 14: Thank you for pointing out the concern regarding the use of the term "scholars" in line 703. I used it to indicate the experts or authorities who have proposed various carbon reduction strategies. However, I understand that the term may be misleading without substantiating references. I'll revise the text accordingly.



Thank you for your comprehensive feedback and suggestions, which are invaluable for improving the quality and clarity of the paper. I apologize for the oversight in grammar, stylistic elements, and inconsistencies in spelling and syntax. I am committed to making all necessary revisions, and I appreciate your input to help guide those changes. I will also ensure that the bibliography is thoroughly checked for errors.

Concerning the inclusion of more art-based articles and scholarship, I agree that diversifying the sources would enrich the paper's depth and perspective. Your guidance on this aspect is much appreciated, and I will consider this diligently in my revisions.

Regarding my presumption about your involvement with the Gallery Climate Coalition, I apologize for the misunderstanding and any inconvenience caused. In your previous review, you mentioned leading with the Gallery Climate Coalition, and I misinterpreted that as an indication of your affiliation with the organization. I did not mean to be presumptuous or inappropriate.

Thank you again for your insightful review; your comments are instrumental in refining the paper.