However, the most likely theory is that Morgoth bred a Maiar with some kind of beast (or one of the nameless things). That would explain the dragons' immense power, but it would also explain why the dragons were completely in thrall to Morgoth.
Morgoth didn't create inanimate objects like rings of power, but he was the one that originally filled Middle-earth with evil. Using his power, Morgoth corrupted a group of Maia and turned them into demonic Balrogs. He also created Orcs by perverting Elves, and he made Trolls by tainting Ents.
It was believed by the Eldar that before Oromë first discovered Cuiviénen, Morgoth had kidnapped some of the Avari and cruelly deformed them, twisting them into the first Orcs.
Morgoth devised or corrupted Trolls during the First Age ("twilight of the Elder Days"). Their exact origins are unknown, though Treebeard believed that Trolls were made by the Dark Lord "in mockery of Ents", similar to the belief that Orcs were a twisted parody of the Elves.
Glaurung was the first of the dragons and one of the foremost lieutenants of Morgoth during the First Age. He had four legs, and a fiery breath, but no wings and could not fly.
Glaurung, Ancalagon, & the Dragons of The Silmarillion | Tolkien Explained
How many dragons did Morgoth have?
Morgoth created an unknown number of dragons, first the non-winged variety and then later the winged ones, and they had their own progeny from that point forth and became a race in their own right. Nobody ever went out and counted them, though their numbers were said to be greatly diminished in the Third Age.
That title falls to Ancalagon the Black, the largest dragon ever to have existed in Middle-earth. He was bred by Morgoth during the First Age to fight for the Dark Lord during his campaign of terror.
Like the devil, Morgoth was one of the first children created by the God of Tolkien's world, but succumbed to jealousy and greed, especially over the creation of other races, and was duly disowned by his fellow Valar.
It was said that Morgoth hated and feared the House of Fingolfin the most of the three Houses of the sons of Finwe, and he feared most Fingolfin's son Turgon, as it was prophesised that from the House of Turgon would his doom come.
Morgoth clearly does have a motive, having a great deal of pride, desiring the power of creation that Eru Ilúvatar possessed, and becoming bitter for being the only one with it. He also wished to have power over Arda and began to destroy it when he was refused this.
He will fight in the Last Battle against the Valar and their allies, but will ultimately be slain by Túrin Turambar, the Man he cursed. By finally defeating Morgoth, Túrin will avenge not only himself, but all members of the race of Men.
The origin(s) of orcs were explained two different ways (i.e., inconsistently) by Tolkien: the orcs were either East Elves (Avari) enslaved, tortured, and bred by Morgoth (as Melkor became known), or, "perhaps ... Avari [(a race of elves)] ... [turned] evil and savage in the wild", both according to The Silmarillion.
Unlike Dwarves and Hobbits, Orcs wouldn't be bred with any sort of awesome-looking spiky Orcish Marriage Ring. Instead, the breeding process would be closer to breeding animals. Man-flesh would have to be fed to both an Orc and an Orc woman nearby, and they'd both initiate the process.
Thus, Galadriel's dark form in Jackson's The Lord of the Rings personified what would have occurred had the Lady of Lothlorien given in to temptation and taken the One Ring for herself. She would have succumbed to evil because the Ring was indomitable, even with her power.
The Balrogs, or Valaraukar (singular Valarauko, Quenya for "Demon of power"), were three to seven Maiar seduced and corrupted by Morgoth into his service, turning into dreadful Úmaiar and scourges of fire cloaked in shadow.
The book Morgoth's ring has Christopher Tolkien note that his father wrote in a margin that he didn't think there were more than 3 Balrogs, or “at most 7” meaning that however many there were, it was a number between 3 and 7, and certainly not more.
Melkor is the most powerful of the Valar but he turns to darkness and is renamed Morgoth, the primary antagonist of Arda. All evil in the world of Middle-earth ultimately stems from him.
Morgoth, the first to reign terror upon Middle-earth, was more powerful than Sauron and commanded an army of dragons and Balrogs. While both Morgoth and Sauron were cunning, Morgoth's rule and terror lasted longer and his corruption spread further, making him more formidable in the Lord of the Rings universe.
Melkor (Quenya: "He who arises in might"), predominantly known as Morgoth (Sindarin: "Black Foe of the World"), was the rebel Vala, the first Dark Lord, and the prime mover of evil in Eä in the Elder Days. Since he could not control Arda, he sought to reduce it to a formless chaos.
While not appearing in the film series (most likely because he no longer existed in the world at the time of the said series because of his banishment to the Void in the War of Wrath in The Silmarillion), Morgoth's most powerful servants, such as Sauron, still thrive, and Morgoth was mentioned in The Lord of the Rings ...
They were monsters created by Morgoth near the end of the First Age. It's unknown how exactly they were created, much like how the process that created orcs or dragons is unknown. Treebeard states that trolls were made in mockery of the ents in a similar way to how orcs were made in mockery of elves.
But there other dragons in Tolkien's lore that get barely any attention at all. While Smaug is certainly a large figure in Middle-earth's history, he is not the only dragon of importance. Dragons are intelligent, powerful beasts that predate many of Tolkien's creatures that audiences are more familiar with.
Gandalf's main reason for supporting Thorin's quest in The Hobbit was to eliminate the threat of the dragon Smaug, who would be a powerful ally for Sauron. Despite popular belief, the Balrog known as Durin's Bane was more powerful than Smaug in Middle-earth, being a literal, primordial demon.
