diff --git a/protocols/v2/subprotocols/mining/src/cashu.rs b/protocols/v2/subprotocols/mining/src/cashu.rs
index 7cc5fa2b1..4e6a7e7b8 100644
--- a/protocols/v2/subprotocols/mining/src/cashu.rs
+++ b/protocols/v2/subprotocols/mining/src/cashu.rs
@@ -267,20 +267,56 @@ impl<'a> TryFrom<Sv2KeySet<'a>> for KeySet {
 }
 
 // TODO find a better place for this
+// TODO make configurable
 pub fn calculate_work(hash: [u8; 32]) -> u64 {
-    let mut work = 0u64;
+    calculate_work_in_range(hash, 36, 64)
+}
+
+/// Calculate work using exponential valuation (2^n) where n is number of leading zero bits.
+/// - Each additional zero bit is exponentially more difficult to find
+/// - Shares should be valued proportionally to their computational difficulty
+///
+/// Parameters:
+/// - hash: The 32-byte hash to analyze
+/// - min_leading_zeros: Minimum number of leading zero bits required (e.g., 36 for mainnet)
+/// - max_representable_bits: Maximum representable difficulty bits (e.g., 64 to compress from 256)
+///
+/// Returns the exponential work value: 2^(min(leading_zeros, max_representable_bits))
+pub fn calculate_work_in_range(hash: [u8; 32], min_leading_zeros: u32, max_representable_bits: u32) -> u64 {
+    let leading_zero_bits = count_leading_zero_bits(hash);
+
+    // Only count work above the minimum threshold
+    if leading_zero_bits < min_leading_zeros {
+        return 0; // Below minimum difficulty, no reward
+    }
+
+    // Cap at maximum representable bits to prevent overflow
+    let effective_bits = std::cmp::min(leading_zero_bits, max_representable_bits);
+
+    // Use exponential valuation: 2^n where n is effective difficulty bits
+    // For values above 63, we'd overflow u64, so cap at 2^63
+    if effective_bits >= 63 {
+        1u64 << 63 // Maximum representable value in u64
+    } else {
+        1u64 << effective_bits
+    }
+}
+
+/// Count the number of leading zero bits in a hash
+pub fn count_leading_zero_bits(hash: [u8; 32]) -> u32 {
+    let mut count = 0u32;
 
     for byte in hash {
         if byte == 0 {
-            work += 8; // Each zero byte adds 8 bits of work
+            count += 8; // Each zero byte adds 8 bits
         } else {
             // Count the leading zeros in the current byte
-            work += byte.leading_zeros() as u64;
+            count += byte.leading_zeros();
             break; // Stop counting after the first non-zero byte
         }
     }
 
-    work
+    count
 }
 
 fn sv2_signing_keys_to_keys(keys: &[Sv2SigningKey]) -> Result<Keys, String> {
@@ -446,14 +482,71 @@ mod tests {
 
     #[test]
     fn test_calculate_work_expected_values() {
-        assert_eq!(calculate_work([0u8; 32]), 256);
+        // All zeros: 256 leading zero bits, capped at 64, gets 2^63 (max u64 value we can represent)
+        assert_eq!(calculate_work([0u8; 32]), 1u64 << 63);
+
+        // 255 leading zeros (one bit set at the end): gets 2^63 (still capped)
         let mut one = [0u8; 32];
         one[31] = 1;
-        assert_eq!(calculate_work(one), 255);
+        assert_eq!(calculate_work(one), 1u64 << 63);
 
+        // 251 leading zeros (0x10 = bit 4 set): gets 2^63 (still capped)
         let mut sixteen = [0u8; 32];
         sixteen[31] = 0x10;
-        assert_eq!(calculate_work(sixteen), 251);
+        assert_eq!(calculate_work(sixteen), 1u64 << 63);
+
+        // Test configurable function with lower thresholds
+        // 40 leading zeros: bytes 0-4 are zero (40 bits), byte 5 has bit set
+        let mut test_hash = [0u8; 32];
+        test_hash[5] = 1; // First non-zero bit is at bit 47 (5*8 + 7), so 47 leading zeros
+        assert_eq!(calculate_work_in_range(test_hash, 36, 50), 1u64 << 47);
+
+        // Below minimum: should get 0
+        let mut low_hash = [0u8; 32];
+        low_hash[3] = 1; // 3*8 + 7 = 31 leading zeros, below minimum of 36
+        assert_eq!(calculate_work_in_range(low_hash, 36, 50), 0);
+    }
+
+    #[test]
+    fn test_count_leading_zero_bits() {
+        // All zeros should have 256 leading zero bits
+        assert_eq!(count_leading_zero_bits([0u8; 32]), 256);
+
+        let mut one = [0u8; 32];
+        one[31] = 1;
+        assert_eq!(count_leading_zero_bits(one), 255);
+
+        // 0x10 in last byte: 4 leading zeros in that byte + 31*8 from previous bytes = 251
+        let mut sixteen = [0u8; 32];
+        sixteen[31] = 0x10;
+        assert_eq!(count_leading_zero_bits(sixteen), 251);
+
+        // First bit set should have 0 leading zeros
+        let mut first_bit = [0u8; 32];
+        first_bit[0] = 0x80;
+        assert_eq!(count_leading_zero_bits(first_bit), 0);
+
+        // Second bit set should have 1 leading zero
+        let mut second_bit = [0u8; 32];
+        second_bit[0] = 0x40;
+        assert_eq!(count_leading_zero_bits(second_bit), 1);
+    }
+
+    #[test]
+    fn test_exponential_valuation() {
+        // Test that each additional zero bit doubles the reward
+        // Use lower thresholds to avoid overflow in tests
+
+        // 10 leading zeros: 2^10 = 1024
+        let mut hash1 = [0u8; 32];
+        hash1[1] = 0x40; // Sets bit 6 of byte 1: 8 + 1 = 9 leading zeros
+        hash1[1] = 0x20; // Sets bit 5 of byte 1: 8 + 2 = 10 leading zeros
+        assert_eq!(calculate_work_in_range(hash1, 5, 20), 1u64 << 10);
+
+        // 11 leading zeros: 2^11 = 2048 (double the previous)
+        let mut hash2 = [0u8; 32];
+        hash2[1] = 0x10; // Sets bit 4 of byte 1: 8 + 3 = 11 leading zeros
+        assert_eq!(calculate_work_in_range(hash2, 5, 20), 1u64 << 11);
     }