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The Art Market Day 2021: Energy-Guzzling NFTs vs. Market Ecology

On 02 December 2021, by Maïa Roffé

On November 16, NFTs, cryptoart and the art market’s environmental impact were the themes of "The Art Market Day" at the Pompidou Centre in Paris.

The Art Market Day 2021: Energy-Guzzling NFTs vs. Market Ecology

Lauren Moffatt, Compost VIII, 2021, 4K video, drouot.com online sale, Maison Guerlain, « Quand la matière devient art ».
COURTESY OF THE ARTIST

After a year of online viewing rooms (OVRs) and closed-door webcast auctions in 2020, the third edition of "The Art Market Day" focused on a burning topic: NFTs, cryptoart and metaverses, a future space on the Internet where you will be able to have immersive experiences as an avatar and, incidentally, buy and exhibit NFTs.

A non-fungible token (NFT) is a unique, non-interchangeable unit of data associated with a digital file (a picture, sound, video, etc.) and stored on a digital ledger (blockchain). Think of it as a large database where information can be stored and transmitted securely using cryptographic processes. “An NFT can be just a certificate of an artwork’s authenticity or the artwork itself, digitally stored on a blockchain,” says Gauthier Zuppinger, who co-founded the market analysis platform NonFungible.com. He defines cryptoart, or a work of cryptographic art, as “any artistic creation of which at least a part exists digitally on a blockchain”.

Mr. Zuppinger continued with examples. First, Beeple’s Everydays: The First 5,000 Days, a digital collage that sold for $69.3M at Christie’s in March, is “the most expensive 100% digital, cryptographic artwork ever purchased”. On the other hand, Damien Hirst’s The Currency is both digital and physical: It brings together 10,000 NFTs on the Palm platform associated with 10,000 Spot Paintings on paper. The third example Mr. Zuppinger mentioned is the digital twin of a museum work, such as the limited series of NFTs associated with Hokusai prints certified by the British Museum and sold on the platform LaCollection.io.

Crash or Market Freeze?
Mr. Zuppinger says that as of November 3, 2021, the cryptoart market posted over a billion dollars in sales involving 350,000 works by approximately 65,000 owners. “Cryptoart works sell in an average of 63 days (editor’s note: usually in Ethereum’s cryptocurrency, Ether) on specialized platforms like KnownOrigin, SuperRare and Opensea,” says the NFT expert. “So far, buyers of this kind of artwork outnumber sellers,” although the resale profit plummeted from $180M one week last August to $10M on November 3. “Is this a crash or a market freeze?” he wonders. In any case, that has not stopped Artprice from announcing the launch of Artprice-nft.com, its NFT marketplace—“an immersive destination for digital art collectors and enthusiasts based on a rigorous selection of NFTs”.

At a panel discussion entitled “The Multiplication of Sales Channels, from the Physical Place to the Metaverse”, Christie’s EMEA president Dirk Boll confirmed the appeal of NFTs for the auction house. “Twenty-two million people viewed the closing minutes of the online sale of Beeple's work,” he said. “It’s a huge community.” Another panel discussion was entitled “NFT: How to Enter this New Market? Good Practices and Traps to Avoid”. One of the participants was Élodie Berthier, head of the Resale Rights and Art Market Department at Adagp, the French society for the collection and distribution of copyright in the field of graphic and plastic arts. “Contractually, the right of resale in France can be applied to successive resales of NFTs,” she pointed out. An NFT is associated with a theoretically non-forgeable smart contract in the form of computer code running automatically without a trusted third party in which the amount of the resale right can be entered. This has been extended to online sales since 2007. “The transaction is automatically recorded in the blockchain, so the money is instantly paid to the seller and the artist without an intermediary,” says artist and curator Kenny Schachter. “Once, art galleries decided who was in and who was out. That’s over now. NFTs can unleash a tidal wave. For the first time, power has shifted to the side of the artists”. That is partly true, according to cryptoart advisor Fanny Lakoubay. “For the first time,” she says, “artists can give their work rarity and monetize it. But it's not for everyone. There is lots to do before entering this market", which is mostly the realm of digital artists. Ms. Berthier shares that view. “Artists and collectors,” she says, “must secure the rights they benefit from following the sale of NFTs, the contracts being dependent on the platform.”

The Environmental Impact
An audience member asked a question about the high environmental impact of NFTs. They are based on the blockchain, which requires continuously running many super-powerful computers simultaneously. This gobbles up incredible amounts of energy. Mr. Schachter replied that a fair such as Art Basel actually is even less environmentally friendly. The panel discussion “How to Reduce the Ecological Impact of the Art Market?” dealt with precisely this issue. Moderator Éléonore Théry recalled that a collective named Le Bruit qui Court handed out flyers at the last FIAC, which stands for Foire international d’art contemporain (International Contemporary Art Fair), suggesting that the event should be renamed FIOC, for Foire inaccessible, onéreuse et carbonnée (Unaffordable, Expensive and High-Carbon Fair) because of the carbon footprint generated by airline traffic, shipping, packing, the energy-consuming digital component, etc. Alice Audoin, the president of Art of Change and a sustainable development consultant, stressed the art world’s need to make its ecological transition by measuring its impact with a life-cycle analysis tool taking into account not only the carbon footprint (greenhouse gas emissions), but also other factors, such as human health. The one being trialed now will be applied at the next Art Paris in April 2022, an eco-designed fair with “Art and the Environment” as its theme.

Marion Papillon, the head of the Comité professionnel des galleries d’art (CPGA, Professional Committee of Art Galleries), recalled that the organization has raised its members’ awareness of good practices in collaboration with the Sustainable Art Market agency and drummed up support for Plinth, a platform enabling users to reuse and share exhibition materials. Tom Woolston, the director of Christie’s global operations, said the auction house is committed to achieving carbon neutrality between now and 2030 by “recycling 90% of its waste and pledging to supply all its customers with 100% recyclable packing materials and printed matter”. Christie’s is a member of the Gallery Climate Coalition (GCC), which aims to facilitate the decarbonization of the visual arts sector and promotes zero-waste practices. Art market players can use an app on their website to calculate the carbon footprint of flights, shipments, energy use, packing materials, printing, etc. “We’ll be expanding this with Ruinart, which sponsors environmentally committed artists and will fund a tool allowing fairs to measure their carbon footprint,” says Ms. Audoin.

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