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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 profitable and nearly free to create (if you are willing to break the law).

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There's no doubt that bitcoin has staying power, but if that's just among criminals (and people who would like to traffic together, like the Silk Road medication sellers and customers), or whether it will 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 find a stash of bitcoin and possess judicial permission to follow the footprints, do this.

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While bitcoin use is not limited to criminals, there is an undeniably large correlation between bitcoin ownership and criminal activity. 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's the key take-away: bitcoins are becoming the"national currency" of criminals the world over and are becoming an increasingly inadequate investment for legitimate miners.

Cryptocurrency mining is painstaking, expensive, and only sporadically rewarding. Nonetheless, mining has a magnetic draw for many investors interested in cryptocurrency. This may 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 the time and equipment, browse this explainer to see whether mining is for you. We'll 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 to it. That said, you certainly don't need to be 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 (example: Using Ethereum or NEO to purchase Bitcoin); you even can earn it by playing video games or by publishing blogposts on programs that cover its users in crypto.

In addition to lining the pockets of miners, mining functions a second and critical purpose: it's the only means to discharge new cryptocurrency into circulation. In other words, miners are basically"minting" currency. For instance, at the time of writing this bit, there were approximately 17 million Bitcoin in circulation.

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

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Besides the short-term Bitcoin payoff, being a miner can give you"voting" power directory when changes are proposed in the Bitcoin protocol. In other words, an effective miner has influence on the decision-making procedure on such issues as  forking.

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

When Bitcoin was first 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 payoff 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 site getting paid for their work as auditors. They are 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."