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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 job to hapless victim machines all over the world. Criminal bitcoin thieves don't incur the exchange rate cost for acquisition of bitcoins. They simply rely on hacking and malware to siphon bitcoin wallets from law-abiding owners.

What we've got here, then, is a commodity (I hesitate to call it a currency) with 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's no doubt the bitcoin has staying power, but whether that's only among criminals (and people who wish to traffic together, such as the Silk Road medication sellers and clients ), or if it will become a valuable trading commodity for the rest of us is unclear.

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My advice to law enforcement is easy: follow the bitcoin. There's no doubt that more and more criminals will be using bitcoin to generate gain as well as cover their tracks. Whenever you find a stash of bitcoin and have judicial permission to follow the footprints, do this.

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

Here is the vital take-away: bitcoins are becoming the"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 draw 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 do it

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Before page you invest the time and equipment, read this explainer to find out whether mining is for you. We will focus primarily on Bitcoin. (Related: How Bitcoin Works and our helpful infographic, What is 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 buy Bitcoin); you even can earn it by playing video games or even simply by publishing blogposts on programs that cover its consumers in crypto.

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

In the absence of miners, Bitcoin would still exist and be usable, but there might never be any additional Bitcoin. There will come a time when Bitcoin mining ends; per the Bitcoin Protocol, the number of Bitcoin is going to be capped at 21 million. (Associated 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" electricity when changes are suggested in the Bitcoin protocol. In other words, an effective miner has influence on the decision-making process on such matters as  forking.

Bitcoin are mined in units known as"cubes" At this time of writing, the reward for completing a cube is 12.5 Bitcoin. At today's cost of approximately $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 would 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 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, 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 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."