Hari Sauri: Once in Mayapur, I was speaking with Pusta Krishna and Achyutananda about consciousness and whether every living being in every atom is conscious or not. Achyutananda was trying to argue that they're not conscious. The living being may be there but its consciousness is not displayed. He said, "If you thought that every living being is conscious, you'd go crazy. You'd think, 'All the atoms in the floor are conscious. So if I tread on the floor it'll hurt them.'" I was not satisfied with his reply so I asked Srila Prabhupada about it.
Prabhupada immediately referred to a verse in the First Canto of the Srimad-Bhagavatam and then gave me the example of the skin and the fingernail. If you cut the skin, then immediately you're hurt, but if you cut the nail, there is no difficulty. In other words, there are different states that come from the same source. Therefore, everything is Krishna, but Krishna's energies work in different ways. Matter and spirit are from the same source but are in different states.
Reference:Memories Anecdotes of a Modern Day Saint - Volume 2 by Siddhanta Dasa