Elon Musk’s Department of Government Efficiency, aka DOGE, aims to start trimming trillions in federal spending with an unlikely plan to get the ball rolling.
In a tweet on Tuesday, DOGE — an agency formed by the Trump administration — pointed out how it costs the U.S. Mint about 3 cents to make each penny—yet it’s only worth 1 cent. Taxpayers shoulder most of the costs, roughly $179 million in FY2023, to mint 4.5 billion pennies, the agency claimed.
Are the penny’s days numbered?
But the penny isn’t alone in its expensive ways—minting a nickel costs 14 cents, and with zinc prices soaring, the penny’s production costs have only risen, now topping 3.7 cents per coin, CBS News reported, citing the U.S. Mint’s 2024 data.
The U.S. wouldn’t be breaking new ground if it were to halt penny production. Canada stopped minting its one-cent coin in 2012. The decision was made due to the high cost of producing pennies. At the time, it cost about 1.6 cents to produce each penny, while the coin’s face value was just one cent.
To replace pennies in cash transactions, prices were rounded to the nearest five cents. This rounding practice applied to cash payments, but electronic payments were not affected.
Meanwhile, Musk is reportedly planning to reduce government expenses by integrating Dogecoin (DOGE) — the joke token that inspired the name of his cost-cutting agency — into federal operations.
But here’s the thing…
The cost to mine Dogecoin can exceed its market value, too. Various factors, like electricity costs and mining hardware efficiency, can make mining a meme coin pricier than the token could be worth.
Like Bitcoin, mining Dogecoin is energy-intensive, even though some miners use less resource-heavy tech compared to Bitcoin’s SHA-256. That said, in regions with expensive electricity, the cost to mine a Dogecoin may be higher than its current value.
Older or less efficient hardware could also make DOGE mining cost more than it’s worth at current prices.
Plus, unlike pennies and nickels, Dogecoin has little to no utility and its market value is often volatile. When the price is low, the cost of mining may exceed the revenue generated from mining. This cause some miners to halt operations.
Conversely, during periods of price surges, mining becomes more profitable.
Ultimately, the economics of mining any cryptocurrency is highly variable, influenced by local conditions and market trends.
