# Mining BASE via PoW

## Mining BASE Tokens

The SEC has stated that proof-of-work (POW) coins/tokens (such as Bitcoin) are a commodity and therefore are outside the SEC's jurisdiction. However, proof-of-stake (PoS) could be classified as "investment contracts" subject to securities laws. This would entail extensive disclosure requirements and adherence to consumer protection regulations. To avoid problems, BASE token started with a POW blockchain (base\_chain) where approved miners generate blocks and create BASE tokens. Once created, the BASE tokens are transferred to the Terra Classic POS blockchain for swaps and utility.

Mining BASE has been operating successfully for the past six months, steadily growing its mining community. Now, the project is ready to take a significant step towards decentralization by transitioning from permissioned mining to permissionless mining. This transition is a crucial move towards achieving a truly decentralized operation akin to Bitcoin, where anyone can participate, and there's no central entity overseeing the mining process. Initially, the project used the "Multichain" mining software, which required permissioned mining due to its enterprise-oriented nature. However, the mining operations are now set to migrate to Basechain, a sovereign blockchain designed for permissionless mining.

Basechain's native coin, basecoin, operates on a Proof of Work (POW) mechanism, similar to Bitcoin. When bridged to the Terra Classic blockchain, it becomes the BASE token. To maintain decentralization and encourage wider participation, the Cryptonote mining algorithm was chosen. This algorithm is optimized for CPU mining and is resistant to ASICs, ensuring that individuals with basic computing hardware can compete effectively in the mining network. Initial blocks on Basechain will have a 6-minute block time and will contain 1400 basecoins. Cryptonote implements a smooth emissions curve, gradually reducing rewards with each block to prevent abrupt changes in rewards. Miners will be rewarded with 1% of the basecoins mined upon bridging over to Terra Classic. Miners shall turn in their basecoins on Fridays and the miner payments (BASE tokens) will occur the following week.

The transition process from Multichain to Basechain is facilitated by the LBUN Project, which will provide a mining setup guide to assist miners in this migration. It's important to note that the LBUN Project does not own Basechain as it is decentralized and cannot offer technical support or troubleshooting assistance. There will be a core developer (like Bitcoin has core developers) to maintain and improve the Basechain protocol, ensuring its stability and security. Miners remain free to join or leave the network at any time. The bridging tax has been reduced to 2% from 5% to encourage miners to participate in the transition to Basechain. The bridging of basecoin to BASE will be disabled when the total supply of BASE reaches 200 million.

<figure><img src="https://3980982127-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FJIYrtLscsLpyemrst4e7%2Fuploads%2FtQls8Tu0dyN6XC9O5EMd%2Fimage.png?alt=media&#x26;token=8590f891-4a70-4d01-b9b0-6277b7e85e46" alt=""><figcaption><p>Basechain’s CryptoNote parameters</p></figcaption></figure>

