The sensors that a thermostat uses to sense water temperature can eventually become displaced, falling away from their attachments to the tank. As a result, the sensors do not read the water temperature as high as it really is.
This can cause the thermostats to switch on and off due to mismatched readings, or cause the water to reach dangerous levels of heat without the thermostats shutting the system off for safety.
The internal components of the thermostat can eventually wear down and lose efficiency. The thermostat may still work properly, but the method it uses to judge heat, such as a thermocouple, can eventually slow over time.
This causes a delay in thermostat reactions, so water may become too hot too quickly or not cool down as easily.
Dust, soot, rust and other contaminants can eventually enter the thermostat and cause problems, especially with its mechanical operation. This can make the thermostat stick so that it fails to send the proper signals to the hot water heater.
Thermostats are complex and it is easier to buy a new version than try to clean your old device.
The wires that your thermostat uses to communicate to the sensors and operational systems of the hot water heater also can malfunction. These wires can fray and lose power so they no longer supply electricity to the key areas of the thermostat.
A thermostat with faulty wiring dies or does not respond to commands.