Why Is Hardware Depreciation a Significant Factor in Calculating Mining Profitability?

Hardware depreciation is critical because ASIC technology evolves rapidly, causing older models to quickly become obsolete and less efficient relative to the rising difficulty. The economic lifespan of an ASIC is often much shorter than its physical lifespan.

Miners must account for this accelerated depreciation (loss of value) to accurately reflect the true cost of their operation and ensure they have capital for future hardware upgrades.