The Blubber

The U.S. Treasury Department announced Thursday that it is winding down production of the penny and will soon cease putting new one-cent coins into circulation.

The Wall Street Journal was first to report the move earlier in the day.

According to a Treasury spokesperson, the government placed its final order for penny blanks this month. The U.S. Mint will continue to manufacture pennies only until its current supply of blanks runs out. While consumers can still use existing pennies for purchases, no new ones will enter circulation — meaning businesses that deal in cash will need to begin rounding transactions to the nearest nickel.

The decision has long been anticipated. Producing a penny costs more than the coin is worth — and President Donald Trump said in February that he had directed the Mint to stop minting pennies due to wasteful spending.

“For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!” Trump wrote in a social media post after returning from the Super Bowl. “Let’s rip the waste out of our great nation’s budget, even if it’s a penny at a time.”

In fact, Trump understated the costs: each penny costs more than three cents to produce.

However, the nickel presents an even bigger problem for the Mint. In the most recent fiscal year (which ended in September), each five-cent coin cost 13.8 cents to make — including 11 cents in production and 2.8 cents in administrative and distribution costs.

Despite longstanding discussions about ending penny production, this is the first time the U.S. government is actually moving forward with it. In the last fiscal year, the Mint tried to reduce losses from nickels by dramatically cutting output to just 202 million nickels, an 86% drop from the 1.4 billion nickels minted annually in 2022 and 2023.

That compares to the Mint producing:

• 5.4 billion pennies in 2022
• 4.1 billion in 2023
• 3.2 billion in 2024

The Treasury’s statement did not clarify whether similar action is planned for nickels, but it did project $56 million in immediate savings by halting penny production.

“Given the cost savings to the taxpayer, this is just another example of our administration cutting waste and making government more efficient for the American people,” the department said.

However, those savings may be erased if the Mint has to ramp up nickel production. If just 850,000 more nickels are minted in 2025 to meet demand, it could eliminate the penny-related savings. And if production returns to 1.4 billion nickels annually, it could cost $78 million more, exceeding the savings from ending the penny.