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Legitimate miners and buyers need to incur substantial production and energy costs, or need to pay the going exchange rates for bitcoins.

Criminal miners pay nearly nothing for its production of new coins, outsourcing the work to hapless victim machines the world over. Criminal bitcoin thieves don't incur the exchange rate cost for acquisition of bitcoins. They just rely on hacking and malware to siphon bitcoin pockets from law-abiding owners.

What we've got here, then, is a commodity (I hesitate to call it a currency) that has a current value, is free of regulation (for the moment), allows for completely anonymous ownership, and is both highly rewarding and almost free to produce (if you are willing to break the law).

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There's no doubt that bitcoin has staying power, but whether that is only among criminals (and people who would like to traffic with them, such as the Silk Road drug sellers and clients ), or whether it is going to become a valuable trading commodity for the rest of us remains unclear.

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My information to law enforcement is easy: follow the bitcoin. There is no doubt that more and more criminals will be using bitcoin to generate profit in addition to pay their tracks. Whenever you see a stash of bitcoin and possess judicial permission to follow the footprints, do so.

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While bitcoin usage is not confined to criminals, there is an undeniably high correlation between bitcoin ownership and criminal action. Notably since bitcoins are becoming increasingly more profitable to criminal malware seeders and botnet operators while concurrently becoming ever less profitable for legitimate traders.

Here is the vital take-away: bitcoins are becoming the most"national currency" of criminals the world over and are becoming an increasingly inadequate investment for valid miners.

Cryptocurrency mining is painstaking, expensive, and only sporadically rewarding. Nonetheless, mining includes a magnetic attraction for many investors interested in cryptocurrency. This may be because entrepreneurial forms see mining as pennies from heaven, like California gold prospectors in 1848. And if you are technologically inclined, why not take action

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Before you invest time and equipment, browse this explainer to see whether mining is really for you. We will focus mostly on Bitcoin. (Related: How Bitcoin Works and our useful infographic, What's Bitcoin)

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By mining, you can earn cryptocurrency without having to put down money for this. That said, you certainly don't need to become a miner to own crypto.   You can also buy crypto using fiat currency (USD, EUR, JPY, etc); you can exchange it on an exchange such as Bitstamp using other crypto (instance: Using Ethereum or NEO to buy Bitcoin); you even can earn it by playing video games or even by publishing blogposts on programs which pay its consumers in crypto.

In addition to lining the pockets of miners, mining functions a second and critical purpose: It is the only means to release new cryptocurrency into circulation. In other words, miners are basically"minting" currency. For instance, as of the time of writing this piece, there were approximately 17 million Bitcoin in circulation.

In the absence of miners, Bitcoin would nevertheless exist and be usable, but there might never be any additional Bitcoin. There'll come a time when Bitcoin mining ends; per the Bitcoin Protocol, the number of Bitcoin is going to likely be capped at 21 million. (Related reading: What Happens to Bitcoin After All 21 Million are Mined).

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Aside from the short-term Bitcoin payoff, being a miner can give you"voting" electricity when changes are proposed in the Bitcoin protocol. In other words, an effective miner why not try these out has influence on the decision-making procedure on such matters as  forking.

Bitcoin are mined in units called"blocks." As of the time of writing, the reward for completing a block is 12.5 Bitcoin. At today's price of approximately $10,000 each Bitcoin, this means that you'd earn (12.5 x 10,000)$125,000.

When Bitcoin was mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. In 2016, this was halved to the current level of 12.5 BTC. In 2020 or so, the reward size will be halved again to 6.25 BTC.

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If you want to keep track of exactly when these halvings will occur, then you can consult with the Bitcoin Clock, which updates this information in real time.

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Miners are getting paid for their work as auditors. They're doing the work of verifying previous Bitcoin transactions. This convention is meant to maintain Bitcoin users honest, and was conceived by Bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the"double-spending issue."