Equipment Depreciation

Equipment depreciation is the allocation of the cost of mining equipment and other long-term technical assets across their useful operating periods.

The concept is particularly relevant to mining because hardware can lose economic value quickly. A newer miner may have substantially better power efficiency, reducing the market and economic value of an older device even when that device remains technically operational.

Factors affecting equipment depreciation

• original equipment cost;
• expected useful life;
• residual value;
• depreciation method;
• economic obsolescence.

Economic obsolescence is especially important for ASIC miners. A device may continue operating, but high electricity costs can make it less economically viable than newer and more efficient hardware.

Equipment depreciation can be included in mining cost and long-term profitability models. The accounting and tax treatment depends on the applicable jurisdiction.