Line a baking sheet with parchment paper or a silicone baking mat and set aside. Use a medium, heavy-bottomed skillet or saucepan and a heatproof spatula or wooden spoon for stirring.
Add the raw peanuts, granulated sugar, and water to the skillet. Stir to coat all the peanuts so they are evenly moistened and the sugar begins to dissolve.
2 cups raw peanuts, 1 cup granulated sugar, 1/2 cup water
Place the pan over medium heat. Stir occasionally as the mixture heats; the sugar will dissolve and the liquid will turn clear, then begin to simmer and bubble. Aim for steady bubbling, not a wild boil.
Continue cooking over medium heat, stirring every 30 seconds. The syrup will thicken and look glossy as it clings to the peanuts, usually taking about 5–7 minutes. Scrape the bottom and sides of the pan to prevent hot spots.
As the water cooks off, the mixture will shift from shiny and syrupy to grainy and sandy as the sugar crystallizes on the peanuts. Reduce the heat to medium-low and stir constantly; this sandy stage is what creates the crunchy sugar shell.
Keep cooking and stirring for another 5–7 minutes over medium-low heat. The sugar will look dry but cling more tightly, and the peanuts will lightly toast. A few spots of lightly melted, pale golden sugar are fine, but avoid letting the sugar get too dark or burnt.
Turn the heat to low. Stir in the vanilla extract, cinnamon (if using), and fine sea salt. The pan may hiss slightly when the vanilla is added; this is normal. Stir until the spices and salt are evenly distributed.
1 teaspoon pure vanilla extract, 1/2 teaspoon ground cinnamon, 1/4-1/2 teaspoon fine sea salt
If using butter, add it now and stir until it melts and lightly coats the sugared peanuts, giving them a subtle glazed finish and making them slightly less dusty.
1 tablespoon unsalted butter
Quickly pour the hot sugared peanuts onto the prepared baking sheet. Use a spatula to spread them into a single layer and separate any large clumps. They will harden as they cool, so work fairly quickly.
Let the peanuts cool for 20–30 minutes, until dry and crisp. Once cool, break up any remaining clusters with your hands. Taste and sprinkle on a tiny bit more salt if needed before storing.