August 5, 2024

IPv4 Address Valuation: Factors Influencing Market Prices

Because of how scarce IPv4 addresses have become in recent years, their prices have become a hot topic, as they have significantly increased and created a complex market. Businesses, ISPs, and investors need to understand the factors that influence their market prices, and this is where we step in.

In this blog post, we explore the key factors that influence IPv4 address valuation and more. So, let’s get right into it!

IPv4 Addresses: What’s the Drama?

Before we get into more details, it’s quite important to understand the challenges with IPv4 addresses that got us here.

IPv4 is the first and oldest Internet addressing system, tailored for a much smaller Internet. It applies a 32-bit address scheme that accommodates only up to 4.3 billion unique addresses. Since the Internet became very popular, the number of available IPv4 addresses started to shrink. That has led to a situation whereby demand far outweighs supply. Although IPv6 has introduced a far greater address space, IPv4 addresses are still widely deployed due to incompatibility and challenges in the transition from it.

What Are the Factors Influencing IPv4 Address Market Prices?

So, what’s driving IPv4 address prices up and down—mostly up? Here’s what:

Scarcity

It’s a rule of thumb, right? The less something is available, the more expensive it becomes. The first and most obvious reason for the price increase for IPv4 addresses is scarcity. Back in 2011, the distribution of the last blocks of IPv4 addresses was announced by IANA—the Internet Assigned Numbers Authority. Later on, regional internet registries, the RIRs, also ran out of their pools. That’s why IPv4 address prices have increased dramatically.

Supply and Demand from Emerging Markets

As internet penetration rates increase, so too does demand from emerging markets. Any country in the process of fast digital changes usually requires several IP addresses for the support of new internet users, businesses, and services. 

As the number of available IPv4 addresses decreases, with increased demand for internet connectivity as a result of emerging markets, prices naturally rise. This dynamic has been particularly pronounced in recent years.

Corporate Mergers and Acquisitions

Any company going through a merger or acquisition typically needs more IP addresses to match the new network infrastructure that comes along with the process. Demand from corporate activities like these may push the price of IPv4 addresses higher, at least for some time, particularly if the acquiring company must rapidly integrate the acquired entity’s network.

IPv4 Address Block Size

One of the highly influential factors that alters the price of a bought or sold block of IPv4 addresses is its size. Large blocks, such as /16 and /17, will have a higher price per address due to the block’s scalability and manageability. 

In contrast, smaller blocks, like /24, have lower per-address prices but are more in demand and traded according to their availability and the fact they fit into smaller-sized networks. 

However, the scarcity of large blocks often drives up their overall price.

Geographic Location

The value of the IP address may also vary depending on the geographical regions. The cost is usually higher when it involves a region with high internet usage and infrastructure development, such as North America and Europe. However, prices are always lower in regions that have low internet usage.

Regional Internet Registry (RIR) Policies and Transfer Fees

Regional Internet Registries have different policies and transfer fees that further impact the cost of an IPv4 address. Different RIRs, like ARIN, RIPE NCC, and APNIC have different transfer policies, which can influence the ease and cost of acquiring IPv4 addresses in their respective regions.

Market Speculation and Trends

IPv4 is a dynamic market, and the prices are determined by a myriad of factors. Speculative behavior of buying and selling significantly drives the dynamics of IPv4 address prices. 

If the investors and brokers hold the notion that prices are likely to skyrocket in the future, they will buy large blocks of addresses; this will mean a lower immediate supply of the addresses available, which consequently inflates the prices. 

Market trends of increased IPv6 adoption, economic conditions, new technology developments, or even regulatory changes may influence speculative activity and prices.

IPv4 Address Reputation

The reputation or “cleanliness” of an IPv4 address block is very important in its valuation. IP address blocks with a record of having been involved in abuse, like spamming or blacklisting, are of less value or can be sold at lower prices. Clean addresses without any negative history would have a higher value, ensuring better deliverability with fewer operational problems.

IPv6 Adoption Rates

While the adoption of IPv6 has been steady, the transition is really very slow. That said, the coexistence of both IPv4 and IPv6 truly implies that, for a lot of organizations, the need for IPv4 addresses will still be relevant. In the long term, as more adoption goes to IPv6, the demand for IPv4 addresses could decrease, which could stabilize or bring down prices.

What Are the Current Market Dynamics?

The market for IPv4 addresses is still very active as of 2024; prices continue to skyrocket, and scarcity combined with high demand persists. According to various industry reports, the average price paid for an IPv4 address has gone up severalfold over the past decade alone. Larger blocks have fetched premium prices. The secondary market, wherein addresses are bought and sold between organizations, remains very active.

What Is the Future of IPv4 and IPv6?

While the IPv4 addresses are of high value, the long-term solution to the shortage problem lies in the adoption of IPv6. This is an address system that provides greatly expanded addressing space and is designed for a growing Internet. However, such transition will be gradual, and IPv4 is likely to stay relevant for many years to come.

And there you have it, folks! That was your comprehensive guide to IPv4 address valuation factors. As the IPv4 market continues to evolve, staying informed about the latest trends and developments will be crucial for making wise decisions.

If you want to buy, sell, or lease an IP address, IPv4Mall is your trusted partner for the job!

FAQs

How much does 1 IPv4 cost?

The cost of a single IPv4 address is approximately USD 50.

Why are IPv4 addresses so expensive?

The high cost of IPv4 addresses stems from their scarcity. Unlike IPv6, which has a vastly larger address space, the IPv4 pool was exhausted years ago. This scarcity has driven up prices as demand continues to grow with the increasing number of internet-connected devices.

How much does IPv6 cost?

IPv6 addresses are essentially free. Unlike IPv4, there is a vast supply of IPv6 addresses, making them readily available without a significant cost. The main challenge with IPv6 adoption is the transition from the older IPv4 infrastructure.