NFTs are immutable once minted on the blockchain, but does that mean NFTs can’t be destroyed? If you need to get rid of your NFT there is only one way to do it. You have to burn it. So, what is burning an NFT?
Burning an NFT is the process of permanently removing it from circulation on the blockchain. Burning is accomplished by sending an NFT to an un-spendable address on the network. Once an NFT is burned, it can’t be retrieved or restored. It’s a permanent action.
There’s more to burning an NFT than you might think. Here’s what you will learn.
Contents
If you prefer to listen, we explain burning NFTs in our podcast episode below.
What Is Burning an NFT?
Technically, burning an NFT doesn’t completely eliminate it from the blockchain. All you’re really doing is sending the token to an address on the blockchain that no one has access to.
As a result, the NFT is deemed worthless once it arrives at the burn address. Because no one has access to the burn address, the token will be stuck there for eternity.
Remember, if you burn an NFT you will never see it again. So think twice before committing to it.
Although it may seem drastic to burn a digital asset, burning NFTs is a common event when it comes to everyday crypto activity.
How To Burn an NFT
Burning is as easy as transferring an NFT. After all, that’s all you’re really doing.
Follow the steps below to burn your NFT.
1. Go to the wallet where the NFT you want to burn is stored
You’ll need to access your NFT. You can do this via your wallet or using an NFT marketplace like Opensea.
2. Choose the NFT you want to burn and tap “Transfer”
Navigate to the NFT you want to burn. Once selected, tap “Transfer”.
3. Send your NFT to the official burn address
Send your NFT to Ethereum’s official burn address. There are two addresses recognized as burn addresses.
0x0000000000000000000000000000000000000000
or
0x000000000000000000000000000000000000dEaD
It doesn’t matter which one you choose.
4. Pay the gas fees to complete the burn
Since you are initiating a blockchain transaction, you’ll have to pay a gas fee. If you have enough crypto in your wallet to cover the fee, tap “Confirm” to complete the burn process.
Remember, once you send an NFT to a burn address there is no way to retrieve it. It will be gone forever.
How Much Does it Cost to Burn NFTs?
Burning your NFT is simple. But, it comes with a cost. After I burned my NFT, I was surprised at just how much it cost.
Expect to pay between $5 to $100 to burn your NFT. Burning a token is considered a transaction, therefore you must pay a transaction (gas) fee. This fee varies and depends on the current supply and demand being placed on the blockchain.
Why Burn An NFT?
Here are some of the most common reasons to burn an NFT.
Increase scarcity
Burning an NFT is an easy way to increase scarcity in an NFT collection. This can make them even more valuable. Of course, this is assuming the NFTs are already valuable.
Burning an NFT is not a direct method for increasing an NFT’s value.
Rectify errors
Sometimes creators mess up. When I minted my first NFT, the file size was too large so the image was broken. Thus, I had no choice but to burn it.
The same goes for individual creators and prominent brands with large collections. The only way to rectify an error on the blockchain (assuming it can’t be fixed on a smart contract level) is to eliminate the token from circulation by burning it.
Legal compliance
Sure, the blockchain might be decentralized. But that doesn’t mean certain laws don’t still apply. Since burning an NFT is the only way to eliminate it, burning could be required in certain circumstances to comply with regulations or to avoid legal issues related to ownership or distribution.
Environmental sustainability
Burning an NFT can also be seen as an environmentally sustainable action, as it reduces the carbon footprint associated with trading NFTs on the blockchain.
That said, the act of sending an NFT to a burn address produces carbon emissions. But once there, no one will ever spend valuable energy on it again.
Gamified burning
Some NFT projects offer incentives for burning NFTs. Such incentives might include discounts on purchases, access to exclusive content, physical products, and IRL events.
In these cases, burning an NFT becomes a fun and interactive way to engage with the community and earn prizes, while also contributing to the project’s overall value and scarcity.
One of my favorite examples of gamified burning is the VeeFriends NFT project “Burn Island“.
Frequently Asked Questions
What are the benefits of burning an NFT?
The benefits of burning an NFT could include reducing scarcity, rectifying errors, complying with legal issues, and gamifying the burn mechanism.
How do you burn an NFT on Opensea?
On Opensea, navigate to the NFT you want to transfer, click Transfer, enter the burn address, and confirm the signature request in your wallet to complete the transaction.
Does burning an NFT count as a tax loss?
The IRS has not provided guidance on whether burning NFTs results in a tax loss, according to TokenTax.io. Factors such as the cost basis, the reason for burning, and jurisdiction may influence the outcome.
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