diff --git a/cmd/bd/daemon.go b/cmd/bd/daemon.go
index bea99103..318bda1e 100644
--- a/cmd/bd/daemon.go
+++ b/cmd/bd/daemon.go
@@ -288,24 +288,24 @@ func runDaemonLoop(interval time.Duration, autoCommit, autoPush bool, logPath, p
 	}
 	
 	if dbVersion != "" && dbVersion != Version {
-		log.log("Error: Database schema version mismatch")
+		log.log("Warning: Database schema version mismatch")
 		log.log("  Database version: %s", dbVersion)
 		log.log("  Daemon version: %s", Version)
-		log.log("")
-		log.log("The database was created with a different version of bd.")
-		log.log("This may cause compatibility issues.")
-		log.log("")
-		log.log("Options:")
-		log.log("  1. Run 'bd migrate' to update the database to the current version")
-		log.log("  2. Upgrade/downgrade bd to match database version: %s", dbVersion)
-		log.log("  3. Set BEADS_IGNORE_VERSION_MISMATCH=1 to proceed anyway (not recommended)")
-		log.log("")
+		log.log("  Auto-upgrading database to daemon version...")
 		
-		// Allow override via environment variable for emergencies
-		if os.Getenv("BEADS_IGNORE_VERSION_MISMATCH") != "1" {
-			os.Exit(1)
+		// Auto-upgrade database to daemon version
+		// The daemon operates on its own database, so it should always use its own version
+		if err := store.SetMetadata(versionCtx, "bd_version", Version); err != nil {
+			log.log("Error: failed to update database version: %v", err)
+			
+			// Allow override via environment variable for emergencies
+			if os.Getenv("BEADS_IGNORE_VERSION_MISMATCH") != "1" {
+				os.Exit(1)
+			}
+			log.log("Warning: Proceeding despite version update failure (BEADS_IGNORE_VERSION_MISMATCH=1)")
+		} else {
+			log.log("  Database version updated to %s", Version)
 		}
-		log.log("Warning: Proceeding despite version mismatch (BEADS_IGNORE_VERSION_MISMATCH=1)")
 	} else if dbVersion == "" {
 		// Old database without version metadata - set it now
 		log.log("Warning: Database missing version metadata, setting to %s", Version)