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

Criminal miners pay nearly nothing for its production of new coins, outsourcing the job to hapless victim machines the world over. Criminal bitcoin thieves don't incur the exchange rate fee 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 from regulation (for the moment), allows for completely anonymous ownership, and is both highly profitable and nearly free to create (if you're willing to violate the law).

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There is no doubt the bitcoin has staying power, but if that is just among criminals (and those who would like to traffic with them, such as the Silk Road medication sellers and customers), or whether it will become a valuable trading commodity for the rest of us is unclear.

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My information to law enforcement is simple: follow the bitcoin. There's no doubt that more and more criminals will be using bitcoin to generate profit in addition to cover their tracks. Whenever you find a stash of bitcoin and have judicial permission to follow the footprints, do so.

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While bitcoin use is not confined to criminals, there's an undeniably high correlation between bitcoin ownership and criminal action. Notably since bitcoins are becoming increasingly more rewarding to criminal malware seeders and botnet operators while concurrently becoming less rewarding for traders that are valid.

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

Cryptocurrency mining is painstaking, expensive, and only sporadically rewarding. Nonetheless, mining has a magnetic attraction for many investors interested in cryptocurrency. This might be because entrepreneurial types see mining as pennies from heaven, such as 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 find out whether mining is for you. We'll focus mostly on Bitcoin. (Connected: 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 to it. Nevertheless, you certainly don't need to be a miner to own crypto.   You can even purchase crypto using fiat currency (USD, EUR, JPY, etc); you can exchange it on an Discover More exchange like Bitstamp using other crypto (instance: Using Ethereum or NEO to buy Bitcoin); you even can earn it by playing video games or simply by publishing blogposts on platforms that pay its users in crypto.

In addition to lining the pockets of miners, mining serves a second and vital purpose: It read is the only means to release new cryptocurrency into circulation. In other words, miners are essentially"minting" currency. For instance, at 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 will be capped at 21 million. (Related reading: What Happens 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 suggested in the Bitcoin protocol. In other words, a successful miner has influence on the decision-making process on these matters as  forking.

Bitcoin are mined in units called"cubes" At this time of writing, the reward for completing a cube is 12.5 Bitcoin. At today's cost of about $10,000 each Bitcoin, this means you'd earn (12.5 x 10,000)$125,000.

When Bitcoin was mined in 2009, mining one block could earn you 50 BTC. In 2012, this was halved to 25 BTC. In 2016, this was halved into 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, you can consult 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 preceding Bitcoin transactions. This convention is meant to keep Bitcoin users honest, and was conceived by Bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping prevent the"double-spending problem."