If I use bloom and water drip effect from the developer options, could this potentially harm my Xbox through overheating the gpu or anything? I'm assuming the Xbox version is not optimized for these options yet.
Your Xbox is probably running near max load on some component(s) in most games anyways. The only thing enabling those settings would do is reduce your framerate.
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Or crash, which is another form of shutting down Also that won't cause harm, just have to reset/restart it