Tech • AI • Robotics • Game
Why Are IP Address Prices Soaring?
5/10TL;DR
Once handed out almost for free, IPv4 addresses have become scarce digital assets traded for tens of dollars each, creating a global secondary market shaped by scarcity, reputation, and governance.
KEY POINTS
What an IP address is
An IP address is the routing identifier that lets data reach a machine on the internet, separate from the transport rules handled by TCP. In IPv4, addresses are written as four numbers separated by dots, but technically they are 32-bit values, limiting the total pool to about 4.3 billion addresses.
A system born in early internet research
The addressing model emerged as US research networks sought a common way for different systems to communicate. In the early years, allocations were informal enough that a small group of internet pioneers, notably John Postel, could assign huge address blocks by maintaining a simple registry.
Massive blocks were given away
Early allocations were extraordinarily generous. Large institutions such as MIT, Stanford, Ford, and the US Department of Defense received blocks containing up to 16.7 million addresses each, despite having no realistic need for that scale. At the time, these numbers were viewed as abundant public infrastructure rather than valuable property.
Regional governance replaced informal control
As the network expanded, management shifted to regional registries that act like a digital land registry. Address space was divided among organizations such as ARIN for North America, RIPE NCC for Europe, APNIC for Asia-Pacific, LACNIC for Latin America and the Caribbean, and AfriNIC for Africa. North America ended up with roughly 45% of global IPv4 space.
Scarcity turned addresses into assets
The market changed once registries ran out of freely available IPv4 blocks. In 2019, RIPE NCC effectively exhausted its pool, forcing buyers into the secondary market. There, addresses can be sold, leased, inherited through bankruptcies, or accumulated by specialist investors.
Microsoft helped legitimize the market
A defining moment came in 2011, when Microsoft bought 666,624 IPv4 addresses from bankrupt telecom group Nortel for about $7.5 million, or roughly $11 per address. Prices have since climbed to around $40 to $50 each, with demand surging during the pandemic as cloud infrastructure and remote services expanded rapidly.
Not all IP addresses are worth the same
An address block’s value depends not only on scarcity but also on its reputation. If an address has been used for spam, fraud, abusive proxies, or other suspicious traffic, it may appear on blacklists, reducing its usefulness for hosting or email delivery. Buyers often pay less for such “burned” addresses because cleaning their reputation can take time and negotiation.
Trading is restricted and highly structured
IPv4 transfers are not retail transactions. Blocks generally move in minimum chunks of 256 addresses, and buyers typically need to operate an autonomous system. Transfers are recorded through registries, often with escrow arrangements and lengthy administrative checks, making the process closer to a notarized property sale than to ordinary web hosting.
Fraud and corruption have followed the money
As values rose, so did abuse. In one major African case, a registry insider used shell companies to improperly obtain control of around 50 million addresses and then leased them onward. The fallout hit legitimate users who had built infrastructure on those ranges and later faced costly renumbering.
Routing can also be hijacked
Ownership is one thing; directing traffic is another. The internet’s routing system, BGP, works by networks announcing which destinations they can reach. That openness has enabled hijacks in which operators falsely advertise routes and capture traffic. Such incidents have affected services including YouTube, and have been used in cryptocurrency theft and network disruptions.
IPv6 exists, but migration is expensive
The long-term answer is IPv6, which vastly expands the address pool. But migration is costly and complex because hardware, software, and operational rules were built around IPv4. Large enterprises can spend $18 million to $20 million or more on full migration programs, which helps explain why IPv4 remains valuable despite a technical successor.
France is ahead on adoption
France stands out as one of the more advanced countries in IPv6 deployment, with adoption nearing 50% in some measures. That progress suggests transition is possible, but also highlights how uneven global adoption remains, leaving IPv4 demand structurally high for years to come.
CONCLUSION
The IPv4 market shows how a technical identifier became a scarce financial asset once internet growth outpaced its original design. Until IPv6 is broadly adopted, address scarcity will continue to shape infrastructure costs, competition, and security risks across the internet.
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