Elon Musk's Dogecoin making a run for the pennies isn't exactly groundbreaking news.
Elon Musk's Dogecoin making a run for the pennies isn't exactly groundbreaking news.
Doge recently stated that producing a penny costs over 3 cents and costs taxpayers over $179 million in the 2023 fiscal year. The Mint produced around 4.5 billion pennies in FY2023, accounting for about 40% of the total coins produced. The US Mint reported circulating around 4.1 billion pennies in 2023. In the following year, the Mint's annual report indicated that the cost of producing and distributing a penny increased by over 20% to about 3.7 cents, primarily due to the rising prices of metals like zinc and copper.
The idea of eliminating the penny is not new. Over the years, people have advocated for its removal, as pennies are seldom used as change. With the Covid-19 pandemic and the increasing trend of online shopping, the usage of physical currency has significantly decreased.
In a 2001 episode of "The West Wing," character Sam Seaborn ranted about the penny, stating that most pennies don't circulate but end up in jars and sock drawers instead. Last year, a piece in the New York Times Magazine argued strongly for abolishing the coin.
Eliminating the penny could also benefit businesses by saving time for store clerks and cashiers. According to Jeff Lenard, vice president of strategic industry initiatives at the National Association of Convenience Stores, if each of the 52 million in-person cash transactions at convenience stores saves 2 seconds, it could amount to 1,203 days of increased productivity.
Elon Musk is now involved in the new Trump administration. This week, President Donald Trump officially established the Department of Government Efficiency within the federal government through an executive action. However, Musk's co-runner for the department, Vivek Ramaswamy, was pushed out according to the Wall Street Journal's report.
The cost to produce and distribute a penny in the 2024 fiscal year is approximately 3.69 cents per coin, primarily due to the rising prices of raw materials, particularly zinc and copper. While technological advancements like 3D printing could potentially reduce costs, the current process remains capital-intensive, and economies of scale may not be achievable given the declining production volume of pennies.
Businesses could significantly save time and increase productivity if the penny was eliminated. According to Jeff Lenard, vice president of strategic industry initiatives at the National Association of Convenience Stores, each of the 52 million in-person cash transactions at convenience stores saving 2 seconds could amount to 1,203 days of increased productivity.
Eliminating the penny would also reduce the cost for businesses that handle large quantities of coins, as the cost to produce and distribute a penny increases each year due to the rising prices of raw materials like zinc and copper.