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With the increasing demand for internet connectivity and the growing number of devices connected to networks, IPv4 addresses have become a valuable and limited resource. For businesses considering whether to invest in additional IPv4 addresses, it’s important to assess the potential return on investment (ROI) to make informed decisions.
Despite the emergence of IPv6, IPv4 addresses remain essential for many networks, particularly due to the slow adoption of IPv6 and compatibility issues. IPv4’s limited address space (approximately 4.3 billion addresses) has led to a situation where many organizations are either hoarding or seeking to purchase additional IPv4 addresses.
Several factors have driven the high demand for IPv4 addresses:
The finite number of available IPv4 addresses has created scarcity.
Many organizations still rely on IPv4 due to compatibility concerns and legacy systems.
The increasing number of connected devices, from IoT to cloud computing, continues to drive IPv4 demand.
As IPv4 address blocks become scarcer, their market value has risen, making it important to assess the potential financial returns from acquiring additional addresses.
When assessing the ROI of investing in additional IPv4 addresses, several factors come into play:
The price of IPv4 addresses varies based on the block size, geographic region, and current market demand. As of 2024, the average price for an individual IPv4 address has been steadily increasing, often exceeding $50 per address depending on the region.
Block Size | Number of Addresses | Average Cost per Address |
/24 | 256 | $50 – $60 |
/22 | 1,024 | $45 – $55 |
/16 | 65,536 | $40 – $50 |
Investing in IPv4 addresses offers several revenue-generating opportunities. Organizations can either lease their surplus IP addresses or sell them to third parties. Leasing is particularly attractive for businesses that don’t need the addresses immediately but want to generate ongoing income from their assets.
Leasing out unused IPv4 addresses provides recurring revenue while retaining ownership of the asset.
Selling an entire block of IPv4 addresses can generate significant upfront revenue but forfeits future income potential from leasing.
It’s important to assess the opportunity costs of tying up capital in IPv4 addresses. Businesses must consider whether the funds allocated for IP address acquisition could be better invested elsewhere, such as in infrastructure upgrades or expanding digital services.
IPv4 address prices have historically appreciated due to their scarcity and continued demand. However, this appreciation rate is not guaranteed indefinitely, especially as IPv6 adoption increases. Understanding current market trends and predictions is essential when estimating the long-term ROI of IPv4 investments.
The ROI of investing in IPv4 addresses can be calculated by considering the total costs, potential revenue, and the duration of the investment. Below is a simplified formula for calculating IPv4 ROI:
ROI=Total Costs(Total Revenue Generated−Total Costs)×100
Let’s break down this formula:
Let’s assume a company purchases a /22 block (1,024 addresses) for $50 per address. The total acquisition cost would be $51,200. The company plans to lease out 80% of these addresses for $1.50 per address per month.
After one year, the company will have generated $14,742 in revenue. Assuming no major operational costs, the ROI after one year would be:
ROI=51,200(14,742−51,200)×100=−71.2%
While the ROI is negative after the first year, the investment begins to break even in future years. By year four, the ROI would turn positive.
Criteria | Leasing IPv4 Addresses | Selling IPv4 Addresses |
Revenue Model | Recurring revenue (monthly/annual income) | One-time large revenue |
Asset Retention | Retains ownership of IPv4 addresses | Forfeits ownership of addresses |
Investment Horizon | Long-term income generation | Short-term, immediate cash inflow |
Potential Risks | Market saturation or price decline over time | Missed opportunity if IPv4 prices continue to increase |
As IPv6 adoption grows, the long-term value of IPv4 addresses may decline. However, full IPv6 adoption is still years away, and many businesses continue to depend on IPv4 for their existing infrastructure and services. Here’s a quick comparison of IPv4 and IPv6 investment considerations:
Factor | IPv4 | IPv6 |
Address Space | Limited, nearing exhaustion | Vast, virtually unlimited |
Compatibility | Widely compatible, essential for legacy systems | Limited adoption, mainly for future networks |
Market Demand | High demand, especially for large blocks | Increasing, but slower adoption |
Investment Horizon | Short to mid-term gains | Long-term investments as IPv6 adoption grows |
To maximize ROI from IPv4 investments, businesses should consider the following strategies:
Invest in a range of block sizes to cater to different market segments and maintain flexibility in leasing or selling.
Stay informed about IPv4 market fluctuations and the global adoption of IPv6 to make timely decisions regarding buying, selling, or leasing addresses.
If purchasing or selling IPv4 addresses through a broker, ensure that the fees are transparent and justified by the service provided. Working with reputable brokers can reduce the risks associated with transactions.
Investing in additional IPv4 addresses can offer a lucrative return, particularly for businesses looking to capitalize on the scarcity of available IPv4 space. By carefully assessing the acquisition costs, revenue potential from leasing or selling, and market trends, businesses can calculate the ROI of their IPv4 investments. However, it’s important to keep an eye on the evolving landscape as IPv6 adoption grows and potentially impacts the long-term value of IPv4.
Alexander Timokhin
COO