Anywho, to generate obsidian infinitely from one source block you need to have a lot of Redstone and you have to get water and lava to meet on your Redstone Wire. Nobody is sure why this works, though it was in the PC version for a long time too.
The suggestion about hunting for lakes is even better than making a generator. You may think lava is uncommon in the Overworld, but it isn't really. Just dig deep and pick a direction, you'll find several pools. If you stop to clear pools completely, you can probably find several pools connected to a single pool, like I did. I'm at roughly 2000 of 6000 (maybe even more) Obsidian mined from one series of connected pools. 30 stacks, man... It's insane and I did 27 of them with just one diamond pick. I only use it on Obsidian, I carry around several Stone for cobble/iron/coal and 1 Iron for gold/lapis/diamond/redstone. I also carry a crafting table and wood to make more Stone picks.
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Cheers. I normally end up losing obsidian in the lava.
Place a bucket of water so that the flow is pushing you into the block your mining. Water moves faster than lava, so when you break the block, the water will rush in and turn the lava under it into another obsidian, and prevent both you and the mined block from being burned up. Works 100% of the time.
I store dead bodies all up under my house, and every night I hear them running their mouths.