Virginia City sprang up as a boomtown with the 1859 discovery of the Comstock Lode, the first major silver deposit discovery in the United States. Peter O'Riley and Patrick McLaughlin are credited with the discovery of the Comstock Lode. Henry P. T. Comstock's name was associated with the discovery through his own machinations. According to folklore, James Fennimore, "Old Virginny Finney," christened the town when he tripped and broke a bottle of whiskey at a saloon entrance in the northern section of Gold Hill, soon to become Virginia City. In another story, the "Ophir Diggings", were named in honor of "Old Virginny" by the miners, in recognition of James Finney being "one of the first discoverers of that mining locality, and one of the most successful prospectors in that region."
After the discovery of the Comstock Lode in 1859, the town developed seemingly overnight on the eastern slopes of Mount Davidson, perched at a 6200-foot elevation. Below the town were dug intricate tunnels and shafts for silver mining. The Comstock Lode discovery and subsequent growth of Virginia City was unequaled by the history of other precious metal discoveries. By 1876 Nevada produced over half of all the precious metals in the United States. The Comstock produced silver and gold ore valued at hundreds of thousands of dollars. The wealth supported the Northern cause during the American Civil War and flooded the world monetary markets, resulting in economic changes.
At the time of the discovery of the Comstock Lode, silver was considered the monetary equal of gold, and all production was purchased by the federal government for use in coinage. In 1873, silver was demonetized by the government, in large part due to the flood of silver into international markets from the silver mines of Virginia City.
Like many cities and towns in Nevada, Virginia City was a mining boomtown; it developed virtually overnight as a result of miners rushing to the Comstock Lode silver strike of 1859. But, Virginia City far surpassed all others for its peak of population, technological advancements developed there, and for providing the population base upon which Nevada qualified for statehood. The riches of the Comstock Lode inspired men to hunt for silver mines throughout Nevada and other parts of the American West.
Virginia City population increased from 4,000 in 1862 to over 15,000 in 1863. It fluctuated depending on mining output. In 1879 the mines began to play out and the population fell to just under 11,000. The influence of the Comstock lode rejuvenated what was the ragged little town of 1860 San Francisco. "Nearly all the profits of the Comstock were invested in San Francisco real estate and in the erection of fine buildings." Thus, Virginia City built San Francisco. The Comstock's success, measured in values of the time period, totaled "about $400 million."
Mining operations were hindered by the extreme temperatures in the mines caused by natural hot springs. In winter the miners would snowshoe to the mines and then have to descend to work in high temperatures. These harsh conditions contributed to a low life expectancy, and earned miners the nickname of "Hot Water Plugs."
Between 1859 and 1875, Virginia City had numerous serious fires. The October 26, 1875 fire, dubbed the "Great Fire", caused $12 million in damage.
Mark Twain worked as a reporter for the Territorial Enterprise here in Virginia City in 1863. It was while he was here that he first used the name "Mark Twain."