Configure .htpasswd on nginx

Create file .htpasswd somewhere outside your site-directory:

sudo htpasswd -c /etc/nginx/.htpasswd exampleusername

The tool will prompt you for a password:

New password:
Re-type new password:
Adding password for user exampleuser

The structure of the .htpasswd file would be like this:

username:password

Now put (or modify) next block into file /etc/nginx/sites-available/yoursite

location  /  {
  auth_basic            "Auth needed";
  auth_basic_user_file  /etc/nginx/.htpasswd;
}

Restart nginx:

sudo service nginx restart

Thanks to:
http://kbeezie.com/apache-to-nginx/
https://www.digitalocean.com/community/tutorials/how-to-set-up-http-authentication-with-nginx-on-ubuntu-12-10