[alvar0]

>Hardware can be capitalized, which means you can push it to the balance sheet (for tax or valuation purposes) Can you say a little more about this? Not sure what you're getting at.

I think he means this: that hardware goes to your balance sheet, then it depreciates by a certain amount over those 3 years and that loss may be tax-deductible.

[wongarsu]

In other words: on your bank account it looks like an upfront cost, but because you could sell the servers at any time they really look more like a rental in your books, with capital slowly draining away each year as they become worth less.

[mbesto]

Correct. Depending on what accounting principals you use, this is typically 3-5 years. It's akin to an airlines buying a Boeing plane. It'll cost them $1B let's say, but it'll actually hit their income over 35 years ($1b / 35), which means on their income statement, only ~$28M shows up per year (simplified example). Most companies are valued and taxed on their income, so this is important to understand.