We are happy to reiterate that the Oases platform is finally live on Ethereum mainnet after a successful time on testnet. The mainnet launch is clearly a significant milestone, but it is also a point where we have to allocate more of the focus on the future path of the project and its community. Therefore, it's a good time to continue our opinion series where we started to explore digital ownership which is one of the main valuable properties of NFTs and a big reason to work with the technology. Now it's time to look up from NFTs, see the bigger picture, and explore the concept and its use in society and our common environment.
A community with sustainability at its core
The technical quality of the Oases platform and our dedication to providing innovative solutions is the core of our vision. Also, we want to nurture a strong, active, and flourishing community which we started to explore in our Genesis NFT collection article. We started to envision a story that would symbolize the core values of Oases. When doing this, we concluded that we are all part of something and live in a highly interconnected modern social environment. A lot is happening in the world and it's more important than ever to be open, inclusive, and take responsibility for each other and our common environment. Unfortunately, there are essentially no activities that are isolated from the surrounding world and this applies to crypto and NFTs. Like with anything else, it's important to be aware of the consequences of your actions and activities. So when aiming to start discussing the environmental topic, it is very broad and we will start discussing it today at a somewhat more general level and tying it to what we do at Oases. We intend to revisit the topic in future articles.
The environmental question rose up to become one of the hottest discussion topics in 2021. While this is a strong indication of the growth of the industry and the increasing public scrutiny, the criticism of the energy consumption of the Bitcoin network and the Proof of Work consensus model has since been strong. Elon Musk was at the time getting attention for his crypto-related tweets on Dogecoin amongst others but also famously got Tesla to accept Bitcoin as a payment option. Soon thereafter, Bitcoin was removed as a payment option amid the raving discussion around its climate impact with hard critique from Musk regarding the quickly rising power consumption of the network. Not long after, he stated that Bitcoin payments would be re-enabled when Bitcoin mining was powered by at least 50% renewables.
As visualized, the power demand of the network at a certain time is very volatile but at the time of Musk's harsh critique, we were seeing an extreme increase at the start of 2021. The high power demand at the time corresponds to the annual energy consumption of roughly 200 TWh which is in the same region as the whole country of Indonesia. Since then the network's power demand has decreased and currently sits at around 90 TWh. A large driving factor is the Hash rate of the network, which is essentially the processing power dedicated to the Bitcoin mining process. The processing power directly consumes energy and the two variables are correlated but not linearly as there are a number of other factors. Other factors are the efficiency of the hardware and also the efficiency of the actual power source. The drop in energy consumption of the network decreased quickly in mid-2021 because of the mining ban in China, which made a lot of mining hardware go offline, decreasing the hash rate and also energy consumption. While the hash rate has recovered, we have seen increasingly efficient hardware and a very high conversion rate towards renewable energy sources. The heated debate in early 2021 was a reason for the creation of the Bitcoin Mining Council, which has produced good research on the mining industry since. In their latest survey studies with answers from actors representing around 50% of the network, they concluded that in Q2 2022 renewables had reached over 60% renewables in the industry, which is likely more than most industries.
Ethereum, NFTs, and Climate Impact As an NFT Marketplace, Oases are mostly concerned with NFTs which are smart contract-based tokens. Ethereum is, as mentioned, the network we actively chose to launch the platform on. With some background to how and when sustainability awareness spread in the industry, you may have noticed we’ve been talking about Bitcoin until now which may seem odd to some people. But the reason for this is that Ethereum currently also relies on Proof of Work (PoW) mining in a very similar way and to a similar degree as Bitcoin. This has become an issue and in the NFT space, there have been discussions about whether it's reasonable to facilitate the usage of NFTs on a chain with a significant environmental footprint. At current power demand, the Ethereum networks consume a yearly 80 TWh. This can seem like a large amount of energy, so let's avoid mentioning another country with the same energy consumption. Rather, it’s interesting to make a comparison with other infrastructures that are so closely tied to our daily lives that people often miss to realize the footprint.
The above graph shows an estimation of that aggregated energy consumption of communication technologies. That is the tech behind our smart devices and all digital communication with all the data centers required to facilitate digital platforms like Facebook for example which by itself stood for consumption of around 7 TWh in 2020. So while our two largest crypto networks cause large amounts of carbon emissions through their electricity consumption, it is not that large a number when compared to other global networks and technologies we use daily. Web 2.0 takes a very large amount of electricity to upkeep as well and, in that sense, it could actually be seen as worth it for the blockchain networks that facilitate our transition from Web 2.0 to Web 3.0. Still, the fact that Ethereum has a substantial footprint means that using the Ethereum network to mint and trade NFTs has a part in the environmental footprint.
While the energy consumption of Ethereum is high, it's still important to highlight that it's by far the ecosystem with the largest and most diverse ecosystem, economies, and developer communities. The thing with software like Ethereum is that it is somewhat flexible and regularly updates and therefore changes over time, with the opportunity of removing problem areas like the issue with PoW and the mining that causes emissions. Ethereum is undergoing a move away from Proof of Work to Proof of Stake (PoS) which is a consensus model that is a lot more energy efficient. There are, of course, many levels and dimensions of this move in a more technical sense, and the complexity of such a change for the whole network is almost impossible to grasp. But looking primarily at energy consumption, it will reduce Ethereum energy consumption by up to 99.7%. The move has been ongoing for a long time but we are closing in on the event called "The Merge" where PoW will be turned off and replaced by the highly energy-efficient PoS. This will reduce the significant footprint to such a degree that an NFT mint or transaction would each have a practically negligible climate impact.
It’s noticeable in the industry how the increasing focus on sustainability-related questions has inspired the community to work in a pro-crypto but also sustainable direction. Examples are the crypto climate accord which works towards net zero emission in the industry through renewables, and the Binance charity which focuses on utilizing blockchain to facilitate sustainable action and social impact. We think all efforts are important together with the technical development of Ethereum to reduce the climate footprint. A network magnitudes more energy efficient makes us convinced that there is a bright future for the Ethereum ecosystem that is also without significant climate impact. This is what makes us comfortable deploying and developing on the network and still being conscious of the sustainability of the platform and the NFT space.
As a newly launched platform on Ethereum mainnet, we feel that it’s in our and our community's interest to take the issue of sustainability very seriously. Therefore, we are also working on possible solutions to enable users to cover their footprint and similar solutions. We are also in discussions with several actors to explore in what ways we, as a platform and a community, can make a difference and by that take care of our common world and everything that lives around us.
Don’t forget to keep posted regarding our mainnet incentives, campaigns, and other Oases news on our social media, or email us directly firstname.lastname@example.org.
Oases represent the Metaverse, the new oasis of humanity. It also indicates that NFTs, starting as niche collectibles are rejuvenating the art market. Oases, as its name implies, is an open, innovative, and vibrant community. We are committed to providing trendy, engaging, and distinctive products and functions to meet the demands of our users.