Why not buy 500 .xyz domain names instead of one .com domain? Because there is no need for purchasing 500 .xyz domain names. In fact, if someone could tell me a decent reason as to why they would buy that many, I'd love to hear. Because if they're being sold for $0.02, they obviously have absolutely no real value to them. I understand that it's a joke; by the way.
Also, nobody is going to buy a domain name for just one year - that's not how they're bought. They're normally bought to last than one year, because someone is buying a domain name to build a brand, website, forum, etc, and they plan for it to last over a year. So then with their registrar, they'll pay another £6.84 (take note £'s are worth more than $'s) according to NC to renew the domain.
Why would you spend that much on a worthless .xyz domain for one year, when you could have purchased a decent domain such as .com, .net, etc?