Talk long enough to anyone about cryptocurrencies, and inevitably the topic of “scaling” comes up. Scaling is the ability of a blockchain to handle a larger volume of transactions as it grows in popularity. It’s a little like Godwin’s law but for blockchains.
Scaling is serious stuff for blockchains. It caused a “civil war” within bitcoin years ago, leading to a fork of the chain. And Ethereum is undertaking an ambitious multi-year plan to engineer its way out of its current limitations by creating an upgraded version of itself called Eth 2.0.
The problem is particularly urgent for Ethereum today, as usage of the network has exploded, with everything from decentralised finance to NFTs drawing in users by the boatload. But it might be eco-conscious crypto-artists—not billionaire investors, cryptography geniuses, or financial whizkids—who might force the conversation decisively.
Cryptoart economics
Non-fungible tokens—especially tokens that represent cryptoart—are booming. We’re only a week or so into March and already the volume for cryptoart trading is about 50% of February.
That boom means artists are making great money off NFTs. Prominent artists with followings online like cryptoart’s economic model. Instead of the clubby atmosphere of the traditional art world, with its reliance on intermediaries like galleries and art fairs that can eat up more than half of an artwork’s price tag, selling cryptoart on blockchains was liberating.
In the cryptoart scene, artists connect with collectors directly; the collectors are overwhelmingly generous; and artists can trace how their artwork travels on the blockchain as it’s resold.
Just ask Joanie Lemercier, a French installation artist who has exhibited internationally: “I have had more conversations doing Zooms and Twitter DMs with my new collectors in the past three months than I have in a decade. This is really wonderful,” he says. “A lot of these collectors are really generous.”
A new class of wealthy crypto investors seem happy to part with their fabulous gains for digital works by names like Lemercier or his friend Mike Winklemann, better known as Beeple, whose pieces have broken records for millions of dollars in the last few months. Plus, artists get a cut from secondary sales, thanks to logic coded into the tokens, making enough to pay the rent sometimes, Lemercier says.
Mining matters to minting
Newly rich collectors discovering a new class of digital works. Perfect, right? It was, until Lemercier, who is also a climate activist, started looking into the carbon footprint of minting NFTs on Ethereum.
Lemercier discovered that his last two years of minimising his carbon output—spending hours on trains instead of planes, cutting down his energy consumption, and more—were nullified by the amount of carbon released by minting his cryptoart creations.
For blockchains like Bitcoin and Ethereum power usage is currently a feature, not a bug. They use something called “proof of work” to prevent attacks on the chain that could re-order transactions. The more computational power from miners that are added to the chain, the more secure it is.
Lemercier published his findings on his website, and tweeted about it. It got thousands of likes and hundreds of retweets. Memo Akten, a researcher, built a tool to quantify the amount of carbon each NFT would release. Cryptoart’s carbon footprint had officially become a problem.
“The word that comes to mind is insanity.” he says, of the energy consumed by so-called proof of work blockchains like Ethereum.
Now that the word was about the millions that star artists were making from NFT sales, and the massive amounts of energy use required to create those tokens, the backlash began, Lemercier says.
“I see things on Twitter like, ‘fuck Beeple for burning the world!’,” he says. “Mike is a good friend … and I have seen an increase in very harmful people attacking him.”
Lemercier elaborates: “[Cryptoart collectors] say this is beautiful, we are empowering the world with art. And on the other side you have angry artists who can’t afford to mint one piece, and they see us making millions by burning years of electricity in a second. This sort of antagonism and tension, between the poor and superrich, it reflects what is going on in society.”
Artistic differences
One of the solutions to the carbon problem is Ethereum’s transition to Eth 2.0. This would replace the energy intensive proof of work system with something called proof of stake, which doesn’t require any mining. Instead, transactions are secured by users who deposit their Ether to ensure network participants are behaving honestly.
The problem is the Ethereum upgrade could be years away. Work has been ongoing for years, although it has recently accelerated and hit key milestones. Still, additional work is expected to take another year or two.
That’s too long for Lemercier to wait. He says he’s now organising about 30 artists to take direct action. He promises that among them are “famous blue-chip artists” although he won’t name names.
“We are getting organized to do a PR stunt to boycott the platforms and move to less energy consuming platforms,” he says. “I think it’s a big accelerator for them because there is so much pressure.”
Lemercier is referring to the major cryptoart and NFT platforms, such as the Winklevoss twins-backed Nifty Gateway, which help artists easily mint new tokens, and which create marketplaces for the tokens to be traded. He says he has spoken to the chief executives of all the platforms about the carbon problem, but he has been met with silence.
“I wish profoundly that [the CEOs] would listen to the artists and people concerned, and consider alternatives,” he says. “We are not asking them to quit Ethereum overnight.”
Lemercier says he will soon issue a public call for Nifty Gateway to end a feature known as open editions, which allow artists to sell thousands of tokens linked to artwork.
“That’s going to be unpleasant,” he says. “Within a month they could prevent 2.5 million kilograms of CO2 from being emitted.”
Lemercier says he’s investigated about a dozen possible long-term solutions, ranging from so-called “layer two” additions to Ethereum, and separate blockchains altogether that already operate on proof of stake. “It’s a matter of weeks,” he says. “I think there will be a lot of pressure on artists to move to those platforms.”
Record-breaking artists like Beeple find themselves leading the new cryptoart movement—and market. They could be poised to tip the delicate balance of collectors, artists and infrastructure providers away from Ethereum’s main network.
“[Top artists] are so influential right now. They are not tied to a single platform, which means they have their eggs in different baskets,” Lemercier says. “They are in an amazing position to drive the market somewhere else.”
Emissions hierarchy
Joseph Pallant, founder of a non-profit called Blockchain for Climate Foundation, that aims to use the Ethereum blockchain for carbon trading, thinks the carbon issue could be a key pressure point for NFT platforms to pick a scaling solution.
“I think that pressure is landing,” he says of the platform owners.
Lemercier has suspended issuing new tokens for the time being to mitigate his carbon footprint. Pallant says artists and collectors should first quantify, and then work to reduce their carbon emissions. At the same time, they might consider buying carbon offsets (which Lemercier has argued has no impact on an individual’s emissions).
For Pallant, a longtime carbon markets entrepreneur, the arrival of the carbon question to crypto-markets will be a rude awakening to platform bosses, artists and collectors alike.
“If you think pushback from artists on your platform is something, just think about implementing a proof of work blockchain at a UN climate conference. That’s the gladiator ring for arguments about this stuff,” he says.
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