Dynamite

Dynamite destroys blocks surrounding it and deals 250 damage. Unlike Bombs, it is used more frequently as a mining tool than for combat, since it destroys a large quantity of blocks and takes a longer amount of time before detonation. You can buy dynamite from the Demolitionist for 50 Silver each or you can find them in treasure chests that are located in caves and chasms, common in the Floating Islands.

Dynamite can break through Ebonstone, which is useful for reaching Shadow Orbs if the player has not yet obtained a Nightmare Pickaxe, but is not as cost effective as Purification Powder. It can also break Meteorite with ease, providing an easy way to harvest the material.

They can be stored in stacks of 3 per inventory slot. Dynamite cannot break Dungeon Bricks and Hellstone (it can, however, break Dungeon Brick Walls ). Dynamite is the most popular tool used by Greifers because of it's ability to destroy about anything along with it's large blast radius.

Trivia:

 * In the (leaked) alpha, dynamite would cost 1 Gold instead of 50 Silver.