Overview

Bittensor’s TAO token is increasingly recognized as an attractive investment on decentralized AI infrastructure. Priced around $467 on 4 November 2025, TAO benefits from well-defined, Bitcoin-like tokenomics and expanding use cases. A key catalyst looms in December 2025, when the network’s first halving will cut the rate of new token issuance by 50%, possibly setting up a Bitcoin-style supply squeeze that supporters believe could boost its value.

What is Bittensor?

Bittensor fuses blockchain technology with a reward system that promotes the creation of specialised AI models. Instead of centralised training done by a single company, independent developers contribute AI models to Bittensor’s network. Models compete to provide the most useful outputs and are rewarded in TAO - the native token used for payments and governance. The continuous competition improves quality and expands the network.

How the Network Functions

Infrastructure: Runs on Subtensor, a customised blockchain leveraging Polkadot’s technology. Crucially, AI computations occur off-chain to conserve energy. The blockchain records transactions and coordinates rewards.

Consensus

The Yuma Consensus evaluates model outputs for quality. Validators score the outputs rather than relying on raw computing power, making Bittensor more about AI performance than mining capacity.

Participants:

Miners: Supply AI models and earn rewards for their usefulness
Validators: Evaluate outputs and receive compensation for accurate scoring
Subnet Creators: Establish mini-networks for specific AI tasks, such as image generation or forecasting, by staking TAO
Delegator Stakers: Allocate TAO to trusted validators and share in rewards

Dynamic TAO and Tokenomics

Token Mechanics: TAO has a maximum supply of 21 million, with 10.1 million currently circulating, a market cap around $4.73 billion (as of 4 November 2025) and annual inflation of ~25.6%. The rewards reduce from 7,200 TAO per day to 3,600 post the halving. The inflation rate is expected to reduce to 12.8%. Approximately 72% of TAO is staked, with some subnets offering high yields (e.g., up to ~70% APY in certain cases).

Dynamic TAO:  The Dynamic TAO upgrade (February 2025) tied emissions to subnet performance, while EVM compatibility broadened interoperability. This shift allows each subnet to issue its own token, tradable for TAO, incentivising specialised innovation and rewarding productive subnets. Bittensor’s subnet count grew to 128 before this was capped. The worst subnet performers (according to price & market cap) are removed when a new protocol is willing to pay the registration costs of 2500 TAO. The 2500 TAO registration cost is burnt upon approval.

The Halving Catalyst

Projected for mid-December 2025 (around 11 December), Bittensor’s first halving will cut TAO issuance by 50%. Historically, crypto assets like Bitcoin have rallied in the months following a halving due to reduced supply. Given TAO’s high staking rate and low float, with only about 13.5% of the total supply liquid, the network could experience price appreciation if demand remains strong. Focus on the 1st BTC halving below when block rewards went from 50 to 25 BTC.

History of Bitcoin Halving

Bitcoin has formed a local peak within 18 months of each block reward halving.

Post-Halving Outlook

Immediate (0–1 month): Expect volatility as participants adjust to new emission rates
Medium-Term (3–12 months): Reduced issuance and increased demand for subnet services may support higher prices, similar to Bitcoin’s post-halving dynamics
Long-Term: If AI demand continues growing, TAO’s capped supply and staking mechanics should provide a positive backdrop for the token’s value

Seasonality and Technicals

Source: tradingview.com
*Note that technicals & seasonality also favour TAO.*

*A break of the ATH's of $780 opens up the topside.*

Institutional and Commercial Interest

Major venture capital firms, including Polychain Capital, Digital Currency Group, and dao5, have committed significant capital to Bittensor, reflecting strong confidence in its decentralized AI platform. In 2025, interest intensified as Grayscale sought SEC approval for a Bittensor-focused trust, and several European exchange-traded products (ETPs) tied to TAO emerged or are in development, signaling broader institutional adoption. Companies have also begun to consider and adopt TAO for Digital Asset Treasury (DAT) strategies, mirroring the approach used for holding Bitcoin on corporate balance sheets.

On the commercial side, decentralised AI networks are gaining significant traction - Bittensor and Fetch.ai collectively facilitate about 40% of global decentralised machine-learning activity, processing roughly $12 billion in tasks monthly. The emerging x402 payment protocol underscores this trend, enabling autonomous agents to pay for AI services on-demand via micropayments. For example, Bittensor’s Synth subnet uses x402 to provide predictive analytics as a service, demonstrating how decentralised AI marketplaces can monetize practical use-cases.

Challenges and Considerations

Bittensor's core chain is effectively operated by a small group of Foundation members and validators, suggesting a lack of decentralisation. There is also a lack of transparency when trying to access data such as fees, network expenses, wallets and more. There are no bug bounty programs and no third party audits. The transparency and governance issues need to be addressed before Bittensor can challenge networks such as Bitcoin, Ethereum and Solana.

See the Certik rating above (also rated 4.2/5 by Certik on Coinmarketcap), note there is no Governance reading.

Conclusion

Bittensor aims to provide a decentralised, scalable alternative to centralised AI platforms. In a market projected to reach $1.5 trillion by 2030, TAO’s improving tokenomics, growing staker community, and increasing institutional interest position it as a potentially significant player in the AI economy. The December 2025 halving is anticipated to catalyse price appreciation by tightening supply, while continued innovation and adoption across subnets (aided by protocols like x402) could enhance Bittensor’s long-term utility and value.

Please note that TAO represents a core holding for JellyC’s Bluebottle Digital Infrastructure Fund.

Disclaimer

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Bittensor - Staking, Scarcity and Scale: TAO's Path to a Reference Asset for Decentralised AI