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.