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.
Glossar
Accelerated Depreciation
Concept ⎊ Accelerated depreciation in the context of cryptocurrency mining refers to the rapid decline in the economic value of mining hardware, primarily Application-Specific Integrated Circuits (ASICs).
Hardware Depreciation
Obsolescence ⎊ Hardware depreciation within cryptocurrency, options trading, and financial derivatives contexts primarily manifests as the rapid obsolescence of specialized computing equipment.
Depreciation
Allocation ⎊ Depreciation represents the accounting process of allocating the cost of a tangible asset over its useful life.