- Bittensor blockchain will undergo its first halving on December 14, reducing daily TAO token rewards by half.
- The halving occurs when the network distributes 10.5 million TAO, half of the total 21 million supply.
- The TAO token has dropped 47% over the past year amid a stagnant crypto market.
- Mining rewards reduction will likely concentrate resources into higher-performing subnets while pressuring less efficient ones.
- Miners are expected to tighten operations, focusing on performance and efficiency to maintain profitability after the halving.
The Bittensor blockchain is scheduled for its first halving event on December 14 at about 3:30 am London time. This process will cut the daily creation of its native TAO tokens from 7,200 to 3,600. The halving is triggered once the network distributes 10.5 million TAO, exactly half of the maximum 21 million tokens available.
The halving mechanism functions similarly to Bitcoin’s, aiming to reduce inflation by limiting new token supply. However, Bittensor bases halving on total token supply rather than block count. Current inflation rates suggest the event will happen as planned, according to bittensorhalving.com.
Over the past year, the TAO token has declined by approximately 47%, affected by a less active cryptocurrency market. Arrash Yasavolian, founder of Taoshi, a company utilizing Bittensor, explained that “When inflation falls and demand stays steady, the environment becomes more supportive for long-term price appreciation.” He also noted that networks implementing halving often experience stronger performance since supply contracts as usage grows.
The network operates through subnets, which are AI applications powered by miners contributing their computing resources. These miners receive TAO tokens as rewards, similar to Bitcoin mining incentives. With the halving, the rewards for miners and subnets will be reduced by 50%.
This reduction is expected to cause a redistribution of capital within the subnet economy. Karia Samaroo, founder of xTAO, a crypto treasury focused on TAO, stated, “We expect a ‘flight to quality’ where capital aggressively condenses into the few subnets generating real revenue, while the ‘zombie’ subnets starve.”
Miners, like their Bitcoin counterparts after Bitcoin’s April 2024 halving, will face tighter profit margins. Many may need to improve efficiency or diversify operations to stay competitive. “We expect margins to tighten temporarily, forcing a consolidation of hash power toward the most performant actors,” Samaroo added.
The halving is anticipated to introduce short-term challenges but is intended to promote a more efficient ecosystem. Yasavolian summarized the outcome as “a healthier and more efficient ecosystem,” since inflation drops, reward emissions become more selective, and resources favor subnets with stronger economics.
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