Loading the world into Minecraft a welcome text i presented on signs.
It states that a wheel needs to be set at the right offset to decrypt the password, you can then hit a button and a lamp lights up.

Looking at the mechanism behind the "control room" we see 3 different constructions:
1. The cipher wheel
2. A logic block
3. A tall tower of alternating blocks

Pushing the button in the control room, makes a piston push out a block of the tower, indicating a increment in the program, and turn the cipherwheel once.
It is possible to turn the cipherwheel manually, and this is used to set the offset.

The logic block is a simple redstoneimplemented bitwise xor, with the two inputs from the cipher wheel and the tower of blocks.

In minecraft redstone (wiring) has some properties deppending on the type of blocks used with it. Redstone power passes through wool and not glass, and sand but not the eggs. As seen here:

Putting this together, it turns out to be a crude xor cipher, with the key being the wheel and the turning of it has the same function as a modulus. The tower is the ciphertext, and the block that lights up indicates the current bit.

The most timeconsuming part of this challenge comes in writing down the tower as 0 and 1.
The key is 11 bytes long, and as such bruteforcing the position of it is rather easy:
flag{m1n3cr4f7_x0r_71m3}