The first halving of #Bittensor is expected to occur on December 14, 2025, which will reduce the issuance of new $TAO tokens from about 7200 to 3600 tokens per day.
This step increases the scarcity of TAO, the native token of the network, which may enhance its value and affect the rewards of miners and subnetwork operators.
Specialized AI markets in subnetworks within Bittensor face lower liquidity, leading to more volatility in their Alpha tokens, but this benefits the stronger tokens in the long run.
Experts see this as a turning point for decentralized AI, positioning TAO as the 'Bitcoin of artificial intelligence' by enforcing disciplined economics rather than unfettered expansion.
Introduction:
Bittensor is building a decentralized machine learning network that operates on a peer-to-peer basis, supported by its native digital currency, TAO. On December 14, 2025, Bittensor will witness its first halving, which will significantly reduce the rate of new TAO token issuance.
As with Bitcoin's halving, this planned reduction in supply aims to increase scarcity, enhance network security, reward long-term holders of coins, and achieve greater efficiency across the ecosystem. With the momentum of AI and digital currencies reaching record levels, this event represents a milestone in the shift towards open and decentralized artificial intelligence.
What is Bittensor? An overview of AI-powered blockchain technology:
Bittensor began as an idea to make artificial intelligence accessible to everyone, launched by a team passionate about open-source technologies in 2021. Think of it as a large collective mind: a decentralized network where anyone can contribute computing power or smart algorithms to solve real problems, from image recognition to natural language processing. Unlike traditional AI companies that monopolize data and models, Bittensor distributes work across thousands of nodes worldwide, rewarding participants with TAO tokens for their contributions.
TAO is not just a digital currency; it is a lifeline. You can stake it to run validators (who conduct network security checks) or miners (who generate AI outputs). The essence of the work lies in subnetworks, which resemble specialized neighborhoods within the Bittensor city. Each subnetwork focuses on a specific domain, such as text generation or data analysis, and issues its own #Alpha tokens to manage its internal economies. These devices allow users to purchase services or vote on subnetwork decisions, but everything is tied to TAO for value across the network.
What distinguishes Bittensor is its proof-of-intelligence model. Instead of wasting energy on pointless mathematical puzzles as in some blockchains, Bittensor assesses the actual work of artificial intelligence. Nodes compete to provide the best answers to queries, and winners receive TAO rewards based on evaluations from their peers. This establishes a merit-based system where intelligence is rewarded. No wonder some call it the 'monetary layer' of decentralized AI. TAO is not flashy; it is the stable currency that funds innovation without intermediaries taking profits.
What is a halving event in blockchain economics?
Halving is like opening a new supply tap of tokens. In blockchains with built-in scarcity, such as #Bitcoin or #Bittensor , the protocol automatically reduces the reward for creating new blocks by half upon reaching specified stages. What’s the goal? To mimic precious metals, that is, to make them scarcer over time to better maintain their value.
This reduction contributes to curbing inflation, which is the hidden erosion of purchasing power resulting from the influx of a large number of digital tokens. By slowing down the issuance process, halvings push the network towards a fixed maximum, encouraging token holders to think long-term rather than sell for quick gains. Take Bitcoin as an example: the halvings that occur every 4 years have reduced the number of new coins from 900 to only 450 coins today, which has been linked to massive price increases due to demand exceeding supply.
For operators or miners or validators, this is a real test. Rewards decrease, and thus the costs of electricity or equipment rise sharply when priced in dollars. Efficient players adapt, while others fall back. In Bittensor, the effect of 'issuance pressure' is different because rewards fuel AI production, not just security. It tests whether the intelligence economy in the network can thrive with fewer resources, fostering a more efficient and innovative structure.
Understanding the Bittensor halving process in December 2025:
The first halving of Bittensor is expected to occur when the number of TAO coins circulating in the network reaches approximately 10.5 million coins, which is half of the maximum supply of 21 million TAO coins. Unlike the block-based halving schedule of Bitcoin, Bittensor's halvings are tied to supply, meaning they occur once the total issuances reach a certain threshold.
This reduction will cut block rewards by 50%, reducing the daily issuance from around 7200 TAO coins to 3600 TAO coins. These rewards are distributed to validators, miners, and participants in the subnetworks who provide services to the network. After the halving, fewer coins will enter circulation, which may impact liquidity and the distribution of rewards within the ecosystem.
Market activity and trading volumes may fluctuate as the halving approaches, but the precise effects on price or adoption are uncertain.
Why is this halving important for the network?
Halving is a significant event because it introduces an element of scarcity into the system and ensures the network grows in an organized manner. A decrease in token issuance may encourage participants to improve their operations, helping the network maintain its efficiency and security.
Although some may compare this to Bitcoin's limited supply and expected issuance, it is essential to note that market effects are not guaranteed. The fundamental impact is structural: the network will operate with fewer new tokens, enhancing sustainable growth.
Liquidity pressure and the expected rise in volatility:
Halving the TAO mining reward for subnetworks by 50% leads to a sharp decline in the liquidity of these networks. Transactions that once proceeded smoothly are now affected by sharp price volatility, leading to their collapse. Holders of these tokens face a double-edged sword: significant volatility means greater gains for winners and devastating losses for those unprepared.
These events remind us of the early days of Bitcoin, where reward halvings stirred storms before calming down. Subnetwork tokens, known for their volatility, may amplify this situation, turning simple news into market-moving factors. The opportunity lies in early discovery of resilient tokens, while the risk lies in getting caught in a whirlpool of volatility.
Impact on miners and validators and network incentives:
Decline in miner and validator income:
Rewards are cut in half, but rent and energy costs remain constant. TAO profits reduce fiat currency purchases in the short term, squeezing profit margins for those who did not hedge. It’s a classic turning point: operators must either improve their operations or consolidate, just as happened with the migration of Bitcoin mining workers after the halving that increased the hash rate.
Subnetwork reaction strategies:
Smart subnetworks tackle these challenges by reducing the issuance of alpha currency to align with the reduction in TAO or launching buybacks to absorb excess supply or offering external rewards for outstanding talent. These 'alpha halvings' maintain incentive alignment. As for the lagging networks? They fade away, losing weight in the stakes and becoming marginal as capital flows to leading companies.
