Mining Signa is a two-step process. You create plots, then you mine them.
Plotting is the process of calculating and storing cryptographic hash functions in plot files. These plot files contain the information (called deadlines) necessary to forge blocks.
Mining is the processing of these plots. A mining software scans your plots then submits them to the network and if you submit the best deadline, you earn the block rewards associated with that block.
How Mining Signa Differs from Bitcoin
If you’re here, you’ve probably heard about Bitcoin and how much energy it consumes. The main difference between the two is the type of consensus used, or in simpler terms, how the entire network agrees with each other.
Bitcoin (and other coins) uses a consensus commonly known as Proof of Work (PoW). In PoW, miners generate the computations when it’s needed, which is on every block.
The miner who discovers the solution to the problem wins. The rest don’t.
While this is true for every blockchain, the main difference is the energy required to produce these proofs.
Comparing Bitcoin with Signa, these computations are created upfront when mining Signa. As mentioned above, these computations are stored in plots.
When a block arrives and it’s time for miners to find the solution, cryptocurrencies using PoW will start computing these hashes and submit it to the network. After that block, these computations are now discarded.
Signa, which uses a Proof of Capacity (PoC) consensus, does not discard anything. This means that after you created your plots, they can be used for many years to come. When new blocks come, miners scan their plots and submit the best deadline to the network.
How It Works
Generally speaking, the more plots you have, i.e. bigger storage capacity, the higher your chances at forging a block.
But with the recent upgrade in the Signum network, having more capacity is not the only thing that matters anymore.