The growing demand for IPv4 blocks: Should I buy or lease?

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In recent years, the shortage of IPv4 addresses has become a major concern for companies that rely on network infrastructure to expand their businesses. With the depletion of available blocks and the slow adoption of IPv6, many organizations face the difficult decision of buying or leasing IPv4 addresses. But which is the best option? In this article, we analyze the pros and cons of each alternative and present a financial comparison to help you make an informed decision.

What is IPv4 and why is it in high demand?

The IPv4 (Internet Protocol version 4) is the fourth version of the Internet protocol, responsible for providing unique identifiers for devices connected to the network. It uses 32-bit addresses, allowing for a total of approximately 4.3 billion addresses. However, with the exponential growth of the Internet, this quantity was quickly exhausted, leading to an increase in demand for available IPv4 blocks in the secondary market.

Even with the existence of IPv6, which offers a much larger address space, many networks and services still depend on IPv4 due to the lack of full compatibility with legacy systems, operational constraints, and the need to maintain connectivity with customers using IPv4.

Comparison between buying and leasing IPv4 addresses

The decision between buying or leasing IPv4 blocks depends on several factors, such as budget, short and long-term needs, and the company’s growth strategy. Below, we present a comparative table based on average market costs to help you visualize the investments involved.

CriterionBuy IPv4Lease IPv4
Initial costHigh (between USD 40 to USD 55 per IP)Low (between USD 0.50 to USD 3 per IP/month)
Long-term costNo additional costRecurring payments
Control and ownershipFull ownershipTemporary control
FlexibilityLow (permanent assets)High (use as needed)
ScalabilityLimited by initial purchaseEasy expansion or reduction
ResponsibilitiesMaintenance and complianceUsually managed by the provider
ROI (Return on Investment)Potential future appreciationNo return on investment
AvailabilityDifficult to find large blocksEasy immediate access
Table on the advantages of leasing or buying IPv4.

Considering the maximum purchase value of USD 55 per IP and the maximum lease value of USD 3 per IP per month, it would take approximately 18 months (1.5 years) for the total lease cost to reach the purchase value of an IPv4 block.

Buy or lease IPv4: What is the best choice?

The choice between buying or leasing IPv4 blocks depends on the company’s profile and business strategy. Let’s explore the scenarios where each option makes more sense.

When buying IPv4 is the best choice:
  1. Long-term use: Companies planning to use IPv4 addresses for many years can benefit from buying, eliminating recurring costs and ensuring future availability.
  2. Full control: Owning IPv4 addresses allows for usage flexibility without relying on contracts or changes in the rental market.
  3. Asset investment: The value of IPv4 addresses has historically increased, becoming a valuable digital asset that can be resold in the future.
When leasing IPv4 is the best choice:
  1. Short-term needs: Temporary or testing phase projects benefit from leasing, avoiding high initial costs.
  2. Operational flexibility: The ability to increase or decrease the number of addresses as needed allows for quick adjustments without prolonged financial commitments.
  3. Less responsibility: By leasing, the company does not need to deal with maintenance, compliance with registries (such as ARIN, RIPE, or LACNIC), and transfer issues.

Conclusion

The decision between buying or renting IPv4 blocks should be based on a careful analysis of your business needs. If your company requires addresses in the long term and seeks a strategic asset, buying may be the best option. On the other hand, if the demand is variable and budget is an immediate concern, renting offers greater flexibility and lower initial cost.

Regardless of the choice, it is essential to monitor the IPv4 market, as prices tend to increase due to growing scarcity. Evaluating your growth and infrastructure needs will ensure that your company makes the most advantageous decision.

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