Article contributed by Richard Paxton. Follow them on Medium here.
Did you know that Ethereum’s (ETH) blockchain, which enables the existence of NFTs, owns an annual carbon footprint equal to the size of Hong Kong’s? Or that in order to create and sell a single NFT it costs roughly 660 kilowatt hours (kWh), which releases an estimated 153 kilograms (kgs) of CO-2 into the atmosphere? The voluntary target for personal annual carbon allowance (PACA) is about 4,660 kgs per person on earth, per year. Therefore the creation of a single NFT only uses about 3% of that allowance. The creation of 250 NFTs, however, blows that target out of the water by releasing over 38,000 kgs of CO-2.
Why is this relevant today? Last Friday the esteemed jeweler Tiffany & Co., released an opportunity for 250 CryptoPunk NFT owners to purchase an NFT pendant and unique NFT, both of which are based on the likeness of their CryptoPunk, and made out of 18k rose or yellow gold. Tiffany & Co.’s NFTs, known as NFTtiffs, sold out in a matter of minutes, raising $12.5 million (USD); a win for the Tiffany & Co. brand and for those lucky CryptoPunk owners that bought the pendant, provided they hold and increase their value.
I would argue, however, that for the rest of us this represents a release of about 38,000 kgs of CO-2 into our atmosphere. The question is, who holds the blame for that loss? The creators of the NFTs and pendants or the collection of CryptoPunk owners and investors? The question matters because it might be okay for a corporation to exhaust inordinate amounts of carbon, whereas individuals are held to a much higher standard. If the individual investor purchases the carbon burden along with the NFT then there isn’t much blame or shame to cast at the CryptoPunk owners. 3% is nothing. If the burden falls on the creators of the NFT — Tiffany & Co. — what does that look like?
Was It Worth It For Tiffany & Co?
I was curious where $12.5 million days rank in Tiffany’s history, so I did a bit of research. LVMH Moët Hennessy Louis Vuitton, which owns luxury brands Louis Vuitton, Christian Dior, Sephora, Fendi and Tiffany & Co., reported that the jeweler’s income for the first half of 2022 surpassed $1 billion dollars. If you forecast another $1 billion for the rest of 2022, and break that number down crudely by dividing by 12 months and an average of 30 days per month the average daily sales figure for Tiffany’s is roughly $5.6 million.
Based on those numbers it would seem reasonable to assume that a $12.5 million day would rank fairly high on the retailer’s yearly sales calendar, minus holidays like Christmas and Valentines Day. The crazy part about Friday’s haul is that it was generated without selling a single piece of jewelry — that is, unless you consider the pendant a piece of jewelry. Some CryptoPunk owners probably do, but most Tiffany & Co. customers would scoff at it. Some tech geeks are scoffing too, with Gizmodo calling out the pendants as ‘ugly’. Maybe they just have FOMO?
I’m on the fence in terms of whether or not the release of 38,000 kgs of CO-2, for the sake of art and investment, should be considered reasonable. The CO-2 numbers and the measurements are abstract enough that we can’t see the tangible result immediately, something Americans can’t handle. We need instant gratification. If the news requires too much patience it gets ignored. This carbon loss discussion in regards to blockchains and NFTs is drowned out by discussions of fraud, rug pulls and money laundering. I too have been guilty of reporting on money laundering, for the most part, instead of the environmental impact of NFTs and crypto. To date there have been few legitimate solutions to report.
Here is what I’d call a semi-solution: CO2ign.Art, a site where artists can sell electronic files securely and where a percentage of the buyer’s purchase price is invested in carbon credits, or offsets. The organization that CO2ign.Art purchases its offsets from, Verra Carbon Standards, tracks all of its greenhouse gas removal efforts on a public registry. That is because of the somewhat sketchy history of companies and organizations purchasing carbon offsets and then calling themselves “green” with no tangible data to show for their efforts. It became known as green-washing. Hence why Verra Carbon Standards maintains such a transparent posture. It has to.
Are carbon offsets benefiting the environment? I don’t know. All I know is that an old, but cool brand in Tiffany & Co. just made $12.5 million in a matter of minutes with a really clever NFT marketing campaign directed at a very niche audience of digital investors. That is impressive. It is marketing genius. It represents not only a huge cash infusion, but also a dynamic branding introduction to a new generation and segment of potential Tiffany customers.
I have no idea how much money it costs to purchase 38,000 kgs of carbon offsets from Verra Carbon Standards, but I’m guessing it’s nowhere near $12.5 million? If I am the PR director at Tiffany’s today, I might offset all of the NFTtiffs purchased last Friday, and issue a press release about it. Double win. Well played Tiffany & Co.