What is Bittensor (TAO)?: Staking, Tokenomics, and Use Cases
Bittensor combines blockchain technology with machine learning to build an open marketplace for AI. It aims to create a decentralised network where users can contribute AI models and share computational resources.
In this guide, we'll explain everything you need to know about Bittensor: what it is, how the subnets, mining, and staking systems work, and look at real-world use cases.
What is Bittensor
Bittensor is a decentralized blockchain network designed as a global and permissionless marketplace for AI. It promotes the collaborative creation and training of AI models to produce high-quality machine intelligence.
Jacob Steeves and Ala Shaabana co-founded Bittensor in 2019 and first launched it in 2021. It was built with the aim of decentralizing AI and creating a public, open-source ecosystem that reduces the influence large technology companies have over the sector.
How does Bittensor work?
Bittensor is made up of subnets, each of which functions as its own incentive-based market. This is where the artificial intelligence services are produced, validated, and rewarded. Each subnet operates as its own market with focused tasks such as image generation, data scraping, or financial prediction.
Mining in Bittensor
Mining within Bittensor is different from mechanisms you see in Proof-of-Work or Proof-of-Stake. It happens within each subnet and is referred to as ‘Proof-of-Intelligence’ (PoI).
The subnet owners are developers in charge of locking up $TAO (Bittensor’s native token), maintaining the codebase, and providing the incentive mechanism that dictates the tasks miners need to perform and the criteria that validators follow in scoring the miner’s work.
Miners provide the computational resources to complete these tasks.
Validators verify the work and also ensure that the network’s data remains accurate and secure.
Staking in Bittensor
Users stake their TAO on a subnet of their choosing and receive that subnet’s alpha token as a representation of their stake. Stakers then earn yield based on the activity and performance of the subnet they support.
This means that the most popular subnets often receive the most token emissions, and underperforming subnets are at risk of being replaced by new and upcoming subnet proposals.
What is TAO?
$TAO is Bittensor’s native token, used for transactions, governance, and rewards in the PoI mechanism. The token mechanics of TAO are heavily influenced by Bitcoin: the maximum supply is capped at 21 million tokens, and periodic halving is scheduled to reduce inflation and increase scarcity.
When is the next Bittensor halving?
The last TAO halving took place on December 13, 2025. This halving reduced rewards from 1 TAO to 0.5 TAO, and reduced total daily emissions from ~7,200 to ~3,600.
The next Bittensor halving is expected around December 11, 2029, or when total TAO issuance reaches 15,750,000 TAO. This will cut emissions rates by 50%: rewards will decrease from 0.5 TAO to 0.25 TAO, and daily emissions from ~3,600 to ~1,800.
The date of the halving can change. Subnet registration fees are recycled back into the emission pool rather than burned, and then reused before any new $TAO is created. This extends the time to reach the total TAO emissions needed before halving, hence the possibility of the date being pushed back.
| Halving event | Trigger point | Date | Daily emissions rate | Block reward |
|---|---|---|---|---|
| Genesis block | - | March 25, 2021 | ~7,200 | 1 TAO |
| First halving (completed) | 10.5 Million TAO | December 13, 2025 | ~3,600 | 0.5 TAO |
| Second halving | 15.75 Million TAO | December 11, 2029 (estimated) | ~1,800 | 0.25 TAO |
| Third halving | 18.375 Million TAO | TBD | ~900 | 0.125 TAO |
| Fourth halving | 19.687 Million TAO | TBD | ~450 | 0.0625 TAO |
Benefits of Bittensor
Bittensor has many benefits, particularly around its main mission of decentralizing artificial intelligence. Here are some of the benefits:
Decentralization & open access: The goal of Bittensor is to create an open-source and public resource that no longer relies on corporate-controlled AI usage and availability
Equal opportunity: Helps smaller developers compete with large, well-funded tech companies
Specialized markets: Each subnet focuses on its own task, creating a range of varied and usable services
Knowledge sharing: Models in the network collaborate and learn from each other to help reduce the need to retrain from scratch
Staking rewards: Users can stake to earn network yields while also driving value into the ecosystem
Risks of Bittensor
Despite its benefits, Bittensor also faces a number of risks and challenges. Here are a few:
Adoption and network growth: Bittensor’s success relies on widespread adoption. This includes the developers needed to build new AI projects.
Decentralization: Recently, Covenant AI left the Bittensor ecosystem, accusing it of not being as decentralized as Bittensor advertises.
Competing networks: AI is a growing sector in crypto. Bittensor faces competition from emerging AI crypto projects and tokens.
Inflation: Bittensor remains inflationary as it currently still emits around 3,600 tokens daily. If this is not matched by growing demand, there will still be price pressures.
Scams: Bittensor is permissionless and public, which has led to low-quality and sometimes fraudulent subnets. These subnets’ alpha tokens could face steep crashes and potentially impact the overall value of the ecosystem.
Regulatory scrutiny: Regulation around AI is still developing. Bittensor could face future regulatory restrictions.
Bittensor use cases
Due to the nature of Bittensor’s subnets, it has a wide range of use cases. Each subnet has its own specific function, ranging from image generation and virtual assistants to deepfake detection.
Here are a few of the use cases:
Training LLMs: Supporting the development and learning of large language models
Pharmaceutical research: Simulating drug interactions to advance research
Software engineers: Code generation, debugging, and testing
Sports predictions: Predicting real-world sports results and market outcomes
Storage: Offering blockchain-based storage solutions
Trading signals: Creating trading strategies and models with revenue paths
How to buy Bittensor
If you’re considering purchasing $TAO, here are a few simple steps:
Choose an exchange: If you do not already know which exchange to use, you can research centralized exchanges that offer TAO. These include Coinbase, Binance, and KuCoin, among others.
Funding: Deposit fiat currency or other cryptocurrency into your account.
Purchase TAO: Use the funds in your account to trade for TAO tokens.
Transfer to a wallet: To hold and manage your TAO, transfer it to a non-custodial, Bittensor-supported wallet.
Bittensor tax
If you are purchasing, selling, or staking TAO, the likelihood is that you will need to pay Capital Gains Tax or Income Tax.
Capital Gains Tax applies to selling, trading, and spending tokens, in this case, TAO and subnet tokens.
Income Tax will apply to any generated yield from staking your TAO.
If you’re looking for a simple way to calculate the taxes you owe from your Bittensor transactions, use a crypto tax calculator like Koinly. By uploading your transaction history, Koinly can calculate your gains, losses, and income for you and generate specialized tax reports.
