It’s been a few months since the NFT craze began, but it has quickly reached unexpected and consequential new heights. In early October, NFT sales reached $10.7 billion, more than eight times more than the previous quarter, according to Reuters.
Even as NFTs represent a new monetization opportunity, especially for the sports industry in terms of collectibles and other memorabilia, this shows that non-fungible tokens might be growing too much, too quickly. And such growth is not always welcome.
The biggest threat is that NFTs have a large carbon footprint. Most NFTs are minted and run on the Ethereum blockchain. A single Ethereum transaction consumes enough power to operate a household in the U.S. for 2.5 days. This carbon footprint is equivalent to 34 kg of Co2, which is also what it takes to make 76,000 credit card transactions.
But there is another important thing to consider. The number of NFT buyers remains relatively small, despite the number of high-profile celebrities that are jumping onto the trend. According to data from NonFungible, there are just over 265,000 active wallets trading NFTs on the ethereum blockchain. This means that the market is highly concentrated on just a few individuals.
While this may be discouraging for the NFT enthusiasts that are still thinking about participating in this market, it also shows that the market is still so new. There may be other new ways of monetizing interest in industries that have so far benefitted from the NFT craze, including sports.
New technologies, like OTT streaming, fan engagement, or even highly interactive environments, may tap into a larger, less concentrated market that is also not so unfriendly to the environment. And who knows, maybe one day new technological breakthroughs might help reduce their carbon footprint.
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