Bittensor's first halving completed: TAO drops 8% in response, AI mining ecosystem faces a "big test"

The highly anticipated decentralized artificial intelligence network Bittensor successfully executed its first block reward halving on December 14. According to the established rules, the daily release of TAO tokens was cut from 7200 to 3600, marking the official transition of its issuance rate into a long-term decaying trajectory. While halving events have long been regarded as key catalysts for scarcity value, market reaction was subdued after the event, with TAO price dropping about 8% in a single day. This halving not only tests the tokenomics but may also trigger a profound reshuffle within its internal “subnet” mining ecosystem. Subnets that are efficient and capable of generating real revenue will be favored, while “zombie subnets” face elimination.

Halving as Expected: The Coming-of-Age of Economic Models and Market Tepidity

Just like Bitcoin’s scheduled quadrennial halving, Bittensor’s network automatically triggered its first halving mechanism when the total supply of TAO reached 10.5 million (half of its 21 million maximum supply). This means that the block rewards for contributing computational resources—“miners” (i.e., subnet operators)—were cut by 50%, with daily new TAO tokens decreasing from 7200 to 3600.

Unlike Bitcoin’s halving triggered by block height, Bittensor’s halving is determined by total supply thresholds but follows a similar approximate four-year cycle. Grayscale’s latest annual outlook report lists “AI centralization calls for blockchain solutions” as one of the top ten crypto investment themes for 2026, with Bittensor included as a related asset, reflecting mainstream institutional interest in the decentralized AI sector. However, market reaction to this milestone was unexpectedly negative. Post-halving, TAO’s price fell about 8% within 24 hours, hovering around $266, with the past year’s decline now nearly 53%.

Analysts suggest that the short-term price decline may be driven by classic “buy the rumor, sell the news” market behavior and macro headwinds in the broader crypto market. But deeper reasons lie in the halving’s direct challenge to the network’s economic sustainability. Just as Bitcoin miners seek cheaper energy or diversify into other high-profit sectors after rewards are halved, the profits of Bittensor’s “miners”—participants operating specific AI subnet services—will be sharply compressed. An efficiency revolution within the network is now unavoidable.

Key Information on Bittensor’s First Halving

Halving Date: December 14, 2025 (around 3:30 AM London time)

Trigger Mechanism: Total circulating TAO reaches 10.5 million (half of the total 21 million supply)

Block Reward Change: From 7200 TAO daily to 3600 TAO daily

Halving Cycle: Approximately every four years

Current Price Reaction: Down about 8% within 24 hours post-halving, at around $266

Subnet Ecosystem Reshuffle: “Capital Concentrates on Quality Assets” and “Zombie Subnets” Dilemma

The core architecture of Bittensor is composed of numerous “subnets” focused on different AI tasks (such as image generation, language model training, data retrieval, etc.). Participants earn TAO rewards by providing computing power or data services to these subnets. However, the halving acts like an unexpected cold snap, drastically changing the survival rules of this ecosystem.

Karia Samaroo, founder of xTAO—focused on Bittensor ecology—predicts that halving will trigger a “capital concentration effect”. This means that capital and computational resources will be increasingly directed toward a few select subnets capable of generating genuine, sustainable yields. Conversely, “zombie subnets” lacking clear business models and existing solely for inflation rewards will see their rewards slashed, facing imminent “starvation” or elimination.

This reshuffle is a necessary step toward network maturity. Just as Bitcoin halving eliminated inefficient miners, improving overall network security and efficiency, Bittensor’s halving will force a reallocation of resources from low-value areas to high-value ones. Arrash Yasavolian, founder of ecological research firm Taoshi, notes that, in the long run, this mechanism creates a more favorable environment for price growth: “When inflation declines and demand remains stable, a healthier environment for long-term price appreciation is formed.” The ultimate outcome will be a healthier, more efficient ecosystem with reduced inflation, selective emissions, and resources flowing to subnet services that create value.

Following Bitcoin’s Path: Miner Pressure and the Long-term Value Game of Ecosystem

Bittensor’s recent halving is widely seen as an important mimicry and stress test of Bitcoin’s economic model. Reflecting on Bitcoin’s April 2024 halving, where rewards dropped from 6.25 BTC to 3.125 BTC, this directly prompted large-scale industry consolidation and transformation, with many miners seeking cheaper energy or diversifying into high-margin AI computation services.

Now, similar scenes are playing out in Bittensor’s AI mining ecosystem. Samaroo anticipates that profit margins will temporarily tighten, forcing computational power to concentrate among the most efficient participants. Only those with the best algorithms, lowest operating costs, or the most demanded subnets will continue to profit and survive after the reward halving. This Darwinian competition, though brutal, is widely viewed as essential for strengthening the network’s long-term vitality. It ensures that newly issued, increasingly scarce TAO tokens will mainly reward nodes that genuinely contribute valuable AI services to the network.

Grayscale analyst Will Ogden Moore previously commented that Bitcoin’s history shows reduced supply can enhance network value, and Bittensor’s first halving marks a key milestone toward reaching its 21 million cap and network maturity. The market is closely watching whether this significant commitment to scarcity can, like Bitcoin, ultimately translate into solid price support and a more robust network foundation.

What is Bittensor? Understanding the Vision of Decentralized AI Networks

For many investors, Bittensor may still be a relatively unfamiliar name. In brief, Bittensor is a blockchain protocol aimed at building a decentralized AI marketplace. Its ambitious goal is to challenge the monopolistic dominance of centralized AI giants like OpenAI and Google.

In the Bittensor network, AI development and training are not controlled by a single company but are conducted through a decentralized marketplace composed of numerous “subnets.” Any developer can create a subnet providing specific AI services (e.g., text summarization, code generation, image recognition); anyone with computational resources can act as a “miner,” contributing power to these subnets and earning the network’s native token TAO as rewards. This model coordinates global compute power through economic incentives, theoretically fostering a more open, innovative, and censorship-resistant AI development ecosystem.

TAO tokens are the economic core of the network, with an economy modeled after Bitcoin: fixed total supply of 21 million, distributed via a variant of proof-of-work, and periodically halved to control inflation. TAO functions both as incentives for network participants and as a medium for value exchange and governance among subnets. With its first institutional investment vehicle—the Grayscale Bittensor Trust (ticker: GTAO)—recently trading on OTCQX, and DCG’s subsidiary Yuma establishing a dedicated asset management arm, the asset is gaining increasing institutional attention.

Institutional Deployment and Market Outlook: Halving as a Starting Point, Not an End

Despite short-term price pains, institutional activities around Bittensor continue apace, suggesting that some long-term investors view this halving as a strategic milestone. Beyond the listing of the Grayscale Trust, Yuma, a Yuma subsidiary of Digital Currency Group focused on Bittensor, recently announced the establishment of an asset management division with an initial $10 million investment, planning to launch funds focused on its subnet ecology.

These developments indicate that professional investors are taking the decentralized AI narrative seriously. Sygnum Bank previously predicted that tokens related to AI intelligences could surpass their speculative status by 2025 and become a new trend. As a leading protocol in this sector, Bittensor’s move to reinforce token scarcity through halving aligns with institutional logic on long-term asset fundamentals.

Looking ahead, market focus will shift from the “halving narrative” alone toward subnet ecosystem growth. Investors should observe whether, post-incentive reduction, the network can attract more high-quality AI models and services, generate greater practical use cases, and external revenue. Only when the network’s internal value creation surpasses the decay of its token inflation can TAO’s long-term value proposition truly realize.