Can NFTs Chart a Sustainable Course for Cannabis and Cryptocurrency?Cannabis NFTs emphasize industry dilemmas and new solutions for a more sustainable future.
Last year was one of the hottest years on record for the planet; it was also the hottest year for NFTs or non-fungible tokens.
A digital artwork titled “Everydays: The First 5000 Days” by digital artist Mike Winkelmann, also known as Beeple, sold for $69 million at Christie’s. It was the first NFT that an internationally renowned auction house had ever sold and that single sale produced 8.7 MWh of energy.
NFTs and Cannabis have a Sustainability Problem
The cannabis industry has been notoriously known for its devastating environmental impacts. In the U.S., cannabis cultivation makes up around 1% of the nation’s total energy consumption.
Cryptocurrencies have enjoyed a venial existence in the world economy while serving as an invaluable tool for transitioning cannabis into a legally controlled substance. On the one hand, it has decentralized a banking system to the point of a value placeholder during periods of extreme inflation – like in El Salvador, but on the other hand, its very existence is dependent on an immense amount of energy powered by limited, nonrenewable resources.
NFTs are a form of cryptocurrency token and can come in multiple forms of media; however, the most popular form is digital artwork, specifically digital images. NFTs are like cryptocurrencies in that both are stored and are transferred on a blockchain. Although, a single Bitcoin block can hold about 1MB of data, while an NFT can hold up to 200MB of data.
When conceptualizing the difference in energy usage between NFTs and cryptocurrencies, it is crucial to consider the energy each block or coin can consume. For example, crypto mining for a currency like Bitcoin consumes 1173 kWh per transaction or about 91 terawatts of electricity per year, and when a single Ethereum token is exchanged, an estimate of 33.4kg of CO2 is produced. Comparatively, just minting – or creating – a data-dense NFT can consume around 142kWh, producing about 48kg of CO2. In a world where fossil fuels are still the primary energy source, these statistics are worrisome.
Cannabis Enters the Metaverse
This month marks the launch of the Crypto Cannabis Club’s physical, NFT-powered cannabis products. The venture invites an unlikely blend of artists, investors, recreational consumers, art enthusiasts, cannabis growers, and cannabis suppliers into a metaverse of cannabis, NFTs, and cryptocurrency.
For the last decade, cryptocurrencies and cannabis have been mutually inclusive elements of the same digital economy where cryptocurrencies could be used to anonymously purchase unregulated cannabis products online. Fortunately, as cannabis becomes legal and more accessible, there is less need for clandestine purchasing practices. But Cannabis NFTs are an entirely new concept.
The Crypto Cannabis Club launched a collection of 10,000 avatars, called NFTokers, all of which are cannabis-inspired. This metaverse-building company aims to provide digital and real-world experiences and products, including games and cannabis flowers, to community members who buy these products and services with cryptocurrencies. Integrating these exclusive cannabis offerings with emerging digital technologies drives new customer-seller relationships.
The Canary Is in the Mining
The bulk of CO2 released from cryptocurrency and NFTs comes from mining. Traditional mining functions under a Proof of Work (PoW) model that uses powerful computers to do advanced calculations using a specific kind of hardware. This process creates a lot of heat, requiring fans to cool down the computers.
Alternatively, proof of Stake (PoS) uses a consensus mechanism whose security is validated by cryptocurrency clients. The PoS model is less energy-intensive than the PoW model. Fortunately, most NFTs can transition to a PoS model. So, future NFTs running on the Ethereum 2.0 blockchain will have a significantly low impact compared to today.
But it’s not just blockchains that are making a move to lower-emission mining practices. Environmentally friendly cryptocurrencies, like SolarCoin, are making their way into crypto wallets. Instead of being mined, SolarCoins are awarded to owners and beneficiaries of solar panels to incentivize sustainable action. Growing cannabis products using a solar microgrid system is precisely what Massachusetts-based Solar Therapeutics is doing. Companies like this and even smaller, licensed independent growers can benefit from affordable systems that contribute to environmental sustainability both on and off the blockchain.
It's still too early to tell whether blockchain technology will become fully integrated into evolving metaverse economies or become the primary payment method for cannabis goods and services. However, understanding the efforts and developing strategies to drive environmental sustainability makes it an attractive investment point for cannabis businesses. Furthermore, as NFTs evolve within the art space and cannabis strains become more and more specialized, cannabis may find itself becoming not only an environmentally friendly choice but a paragon of a new kind of wealth, much like pre-NFT art has long been.