Obsidian

Obsidian is a unique crafting material created when Water and Lava collide, at which point it forms in purple Stone-like Blocks that can be mined. Obsidian appears as an Ore and is gathered similarly, but has no bar form of its own; though it is required in order to craft the essential Hellstone Bars. Mining Obsidian requires a Nightmare Pickaxe, Deathbringer Pickaxe, Molten Pickaxe, any Drill, or Bombs/Dynamite.

Obsidian generator
Obsidian can be harvested by creating a generator. A generator is an exploit that allows the infinite creation of lava and water, to create obsidian. Liquids in Terraria can be duplicated in this way because of a game mechanism in which a full bucket will always produce one full block of liquid, while less than a block of liquid is required to fill the bucket.

This video contains a detailed explanation on how to set up the machine. (instead of just using two blocks on the lava duplicator use three or four, this will allow you to click faster like the water duplicator. since the lava will spread out faster instead of taking a bit longer to actually fall off the block)

With the introduction of mechanisms such as Pumps, wire and timers in 1.1, it is now possible to construct an automatic obsidian generator, which does not require using buckets to repeatedly refill the lava or water vats.

A sample set-up of an automatic obsidian generator can be found here:

Video detailing the construction of a fully automated Obsidian Generator using vats and pumps.

Flooded Hellevator (strategy from LachlanInc)
Another way to make lots of obsidian without going to and from the Underworld is to make a Flooded Hellevator. This works well if you have a cave with LOADS of water pools. If you do just start a hellevator above the water pools and start digging downwards. Yes, I know in Minecraft the #1 rule is to not dig down, but if you have water with you, you're safe. Eventually, as most players know, as you get closer to the Underworld you will find lava instead of water (the place with lava pits don't alter the water with you into more lava, which is a good thing). As the water collides with the lava, you will get lots of you-know-what (obsidian). While making a Flooded Hellevator (by accident), I have discovered that caves have 2 sections. 1) The water section and 2) The lava section, which is closer to the Underworld. Sometimes liquid (I can't say water or lava because they are mixed) pools can be naturally formed ACROSS the gap between sections, making natural obsidian. (found while making a Flooded Hellevator) If your Flooded Hellevator collides with a HUGE lava pit (see next picture), you might as well have your own money maker! (this screenshot was taken during a Blood Moon) If you are going to take my advice, here is what I recommend: •Scuba Gear •Lucky Horseshoe •Cobalt/Obsidian Shield

History
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