#!/usr/bin/env python2 
# Copyright (c) 2015-2016 The Bitcoin Core developers
# Distributed under the MIT software license, see the accompanying 
# file COPYING or http://www.opensource.org/licenses/mit-license.php.

import hashlib
import sys
import os
from random import SystemRandom
import base64
import hmac

if len(sys.argv) < 2:
    sys.stderr.write('Please include username as an argument.\n')
    sys.exit(0)

username = sys.argv[1]

#This uses os.urandom() underneath
cryptogen = SystemRandom()

#Create 16 byte hex salt
salt_sequence = [cryptogen.randrange(256) for i in range(16)]
hexseq = list(map(hex, salt_sequence))
salt = "".join([x[2:] for x in hexseq])

#Create 32 byte b64 password
password = base64.urlsafe_b64encode(os.urandom(32))

digestmod = hashlib.sha256

if sys.version_info.major >= 3:
    password = password.decode('utf-8')
    digestmod = 'SHA256'
 
m = hmac.new(bytearray(salt, 'utf-8'), bytearray(password, 'utf-8'), digestmod)
result = m.hexdigest()

print("String to be appended to bitcoin.conf:")
print("rpcauth="+username+":"+salt+"$"+result)
print("Your password:\n"+password)

#!/usr/bin/env python
# Copyright (c) 2015-2016 The Bitcoin Core developers
# Distributed under the MIT software license, see the accompanying 
# file COPYING or http://www.opensource.org/licenses/mit-license.php.

import hashlib
import sys
import os
from random import SystemRandom
import base64
import hmac

if len(sys.argv) < 2:
    sys.stderr.write('Please include username as an argument.\n')
    sys.exit(0)

username = sys.argv[1]

#This uses os.urandom() underneath
cryptogen = SystemRandom()

#Create 16 byte hex salt
salt_sequence = [cryptogen.randrange(256) for i in range(16)]
hexseq = list(map(hex, salt_sequence))
salt = "".join([x[2:] for x in hexseq])

#Create 32 byte b64 password
password = base64.urlsafe_b64encode(os.urandom(32))

digestmod = hashlib.sha256

if sys.version_info.major >= 3:
    password = password.decode('utf-8')
    digestmod = 'SHA256'
 
m = hmac.new(bytearray(salt, 'utf-8'), bytearray(password, 'utf-8'), digestmod)
result = m.hexdigest()

print("String to be appended to bitcoin.conf:")
print("rpcauth="+username+":"+salt+"$"+result)
print("Your password:\n"+password)

Use 'python' not 'python2'