The Death of the Penny: When Money Becomes Too Expensive to Make

November 12, 2025. Philadelphia. The U.S. Mint strikes its final penny.

The penny costs 3.69 cents to make. Worth: one cent.

When your currency costs more to produce than it’s worth, that’s not a manufacturing problem.

That’s a money problem.

A government running trillion-dollar deficits suddenly cares about $85 million? This isn’t about fiscal efficiency. The penny died because fiat currency inflated past its breaking point. It cannot afford to produce its own smallest unit.

This is the endgame of monetary debasement. And what comes next will determine whether money becomes a tool of freedom or control.

The Pattern

What happened to the penny didn’t happen overnight. This is a pattern. An old pattern. A pattern that has repeated across empires and centuries.

But you don’t need to look to ancient Rome or medieval England to see it. You just need to look at American history.

The penny has lived this entire story in miniature. 233 years from birth to death.

The Penny’s Biography

1793-1857: The Pure Copper Years

The first U.S. pennies were large copper coins. Real metal. Real value. A penny actually contained roughly one cent worth of copper.

In 1857, the government discontinued the half-cent. Why? It had become too small to be useful. Inflation had eroded its purchasing power. People couldn’t buy anything meaningful with half a cent.

Sound familiar?

1864: The First Debasement

Civil War. Government needs money to fight. Can’t raise taxes enough. Can’t borrow enough.

Solution: debase the penny.

Changed composition from pure copper to bronze (95% copper, 5% tin and zinc). Slightly cheaper. Most people didn’t notice. The penny still looked the same. Still felt the same. Still said “one cent.”

But it was the first step.

1943: The Steel Penny

World War II. Copper needed for bullet casings, electrical wiring, military equipment.

The government mints steel pennies for one year. Coated with zinc to prevent rust. They looked silver. People hated them. They looked like dimes. They rusted. They didn’t feel like “real” money.

After one year, back to copper. But the precedent was set: when the government needs resources, the coins change.

1946-1981: The Golden Age That Wasn’t

Back to 95% copper, 5% zinc. These pennies felt solid. Heavy. Real.

But inflation was eating the dollar. What cost a penny in 1946 cost seven cents by 1981. The penny’s purchasing power collapsed.

And copper prices were rising.

1982: The Death Year

This is the crucial year. The turning point. The year the penny died, even though the funeral wouldn’t happen for 43 more years.

Copper prices spiked. A copper penny contained more than one cent worth of copper. People started hoarding them. Melting them down. The metal was worth more than the money.

The government’s solution: change the composition again.

New pennies: 97.5% zinc with a thin copper coating. Just enough copper to look like the old pennies. But inside, cheap zinc.

Here’s the fascinating part: in 1982, the U.S. Mint produced BOTH kinds of pennies. Same year. Some copper, some zinc. Same date, same design, completely different metal.

If you weigh a 1982 penny, you can tell which kind it is. Copper pennies: 3.11 grams. Zinc pennies: 2.5 grams.

This is monetary debasement in a single year. Same government, same mint, same design. Different metal. Different value. The definition of the penny changed midstream.

1982-2024: The Slow Collapse

The zinc penny was supposed to solve the problem. Zinc was cheap. The penny would be affordable again.

But inflation never stops under fiat money. The dollar kept losing value. Zinc prices kept rising. Labor costs kept rising. Energy costs kept rising.

Production costs climbed relentlessly:

The line crossed. The cheap substitute became expensive. The workaround stopped working.

2025: The Funeral

November 12, 2025. The last penny. Under glass in Philadelphia.

What does it say about your currency when you literally cannot afford to produce the smallest unit of it?

It says the currency is dying.

America’s Monetary Pattern

The penny’s trajectory mirrors America’s broader monetary pattern.

Continental Currency. Gold confiscation. Penny debasement. Same sequence.

Continental Currency: America’s First Lesson

Revolutionary War. No tax base. No creditworthiness. Who loans to a rebellion?

Solution: print money. “Continentals.” Backed by promises.

June 1775: 2 million printed. End of 1775: 6 million. By 1779: 226 million.

Result: hyperinflation. By 1781, it took 168 Continental dollars to buy what one dollar had bought in 1777.

“Not worth a Continental” entered American English.

George Washington: “A wagon-load of money will scarcely purchase a wagon-load of provisions.”

The Founding Fathers saw paper money destroyed. They wrote it into the Constitution. Article 1, Section 10: “No State shall… emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts.”

They learned the lesson.

190 years later, we forgot it.

1933: The Gold Confiscation

April 5, 1933. Executive Order 6102. Franklin Roosevelt orders all Americans to turn in their gold coins, gold bullion, and gold certificates.

The official price: $20.67 per ounce.

Americans had to surrender their gold. “For the public good.” “To help the economy recover.” They received paper dollars in exchange.

Then, once the government had collected the gold, Roosevelt revalued it to $35 per ounce under the Gold Reserve Act of January 30, 1934.

Overnight devaluation: 69%.

If you’d held onto your gold illegally, it was now worth 69% more in dollar terms. If you’d obeyed the law and turned it in for $20.67 per ounce, you’d been robbed of 41% of that value.

This is the same theft as debasing coins. Just faster. More efficient. Same principle: change the definition of money, extract the difference.

The Pattern Is Clear:

Each cycle faster than the last. Each debasement more brazen. Each theft more normalized.

The pattern has been accelerating. The Continentals took six years to collapse (1775-1781). The penny took 43 years to go from zinc substitute to discontinued (1982-2025). The modern dollar has been dying for 54 years since 1971.

The pattern hasn’t changed.

The velocity has.

This is not new. This is the oldest story in monetary history.

And it’s America’s story.

What Dies With the Penny

The penny died. What died with it?

Transactional Privacy

Here’s the problem:

Physical cash requires no intermediary infrastructure. When you hand someone a dollar, no third party validates, records, or approves the transaction. The exchange is peer-to-peer by physical necessity.

Digital transactions, by definition, require ledgers.

And ledgers require recordkeepers.

The shift from physical to digital money is not just technological. It is architectural.

It transforms every transaction from a bilateral exchange into a three-party relationship: payer, payee, and validator.

The validator sees everything.

Cash transactions leave no permanent record because physical exchange needs no infrastructure. Digital transactions create permanent records because they require infrastructure to function.

When cash disappears, privacy disappears.

Not through policy change.

Through architectural necessity.

Precision and Control

The Common Cents Act mandates rounding to the nearest nickel for cash transactions. This sounds innocuous. Rounding is mathematical, neutral, fair.

But rounding rules are policy, not physics. They can be changed.

Today: round to nearest nickel (2.5 cents up or down). Tomorrow: round to nearest dime (5 cents). Eventually: “Purchases round up, refunds round down.”

That last rule change is a 4.9% extraction on every transaction, implemented without legislation. Too small to resist. Too distributed to organize against. But it compounds to billions.

And who sets these rules? The same government that debased the penny until it became too expensive to produce.

Once you accept that prices don’t need to be exact, you’ve accepted that money doesn’t need to be precise.

And money that isn’t precise isn’t really money.

It’s a discretionary unit controlled by whoever sets the rounding rules.

Meanwhile, nickels cost 13.78 cents to produce.

The pattern continues.

Each denomination eliminated pushes the baseline higher. Eventually, the smallest unit is a dollar. Then five dollars.

Precision dies in increments.

Each elimination pushes transactions toward digital systems. Digital systems require validators. Validators create records. Records enable control.

Here’s what happens next:

What Replaces the Penny?

Physical money faces a constraint: material cost.

When production exceeds face value, currency dies. Digital has no material cost.

Centralized Digital Currency

Over 130 countries developing CBDCs. Digital yuan deployed in China. Digital euro in development. Digital dollar being researched.

Characteristics:

Not conspiracy. Architecture. Central banks issuing digital currency see what happens with it. That’s how the system works.

Decentralized Digital Currency

Bitcoin: created 2008. Fixed supply of 21 million coins. Rules set in mathematics, not policy.

Divisible to 100 million units (satoshis).

Bitcoin’s smallest unit will never be eliminated because it costs nothing to produce. Zero production cost. Purely digital. Infinitely divisible.

The penny died because fiat currency is physical and constrained by material costs. Bitcoin and Zcash cannot die this way because they are digital and unconstrained.

Bitcoin’s transactions are public. Anyone can verify the ledger. Transparent by design.

But zero privacy.

Zcash (created 2016): same fixed supply, same divisibility, same zero production cost. Adds optional privacy through cryptography.

Divisibility of Bitcoin. Privacy of cash. Without physical production constraints.

The Rules Question

The U.S. government changed the penny’s composition three times. Then discontinued it.

Why? They control the rules.

Bitcoin’s rules: fixed in code. Changeable only by distributed consensus. No president, Congress, or Fed can decree changes unilaterally.

The difference: who can change the rules, and how.

Zcash: same structure. Fixed supply. Distributed rule changes.

The Competition

Both systems exist. Both growing.

CBDCs: regulatory capture, infrastructure integration, decree authority, zero bootstrapping problem.

Bitcoin and Zcash: network effects, mathematical guarantees, bottom-up adoption, severe bootstrapping problem.

The question: which structural advantages matter more?

History: whichever system reaches critical mass first becomes standard.

Reaching critical mass: not individual choice alone. Infrastructure, integration, inertia.

The window: not infinite. Infrastructure lock-in is real.

Choices made now determine default for the next century.

The Fork

November 12, 2025 is not an ending.

It’s a beginning.

Not a crisis. A choice point.

Physical money is dying. Production costs guarantee it. Penny gone. Nickels cost 13.78 cents to produce. All physical currency faces the same constraint: eventually, material costs exceed face value.

Digital money replaces it.

Inevitable.

What is NOT inevitable is which KIND of digital money becomes default.

Two paths diverge:

Path One: Central issuance. Transaction recording. Programmable restrictions. Behavioral freezing. Rules by decree.

What becomes possible: complete visibility, complete control, money that expires, money programmed by behavior, accounts frozen without appeal.

Path Two: Distributed consensus. Fixed supply rules. Optional privacy. Censorship resistance. Rules by code.

What becomes possible: money no authority can inflate, rules no decree can change, privacy no surveillance can penetrate, systems that work identically for everyone.

Both systems exist. Both growing. Both being built now.

Which becomes normal?

Which becomes default?

Which reaches critical mass first?

Network effects decide. First to adoption threshold becomes standard. Standard becomes “just how money works.”

This decade is decisive.

The choice is not being made in legislatures or boardrooms. It’s being made in millions of decisions about which infrastructure to build, which systems to integrate, which tools to adopt.

Governments will push CBDCs. They have regulatory power. Infrastructure access. Decree authority.

Decentralized alternatives have network effects. Mathematical guarantees. But they must bootstrap adoption before infrastructure lock-in makes alternatives irrelevant.

They must prove themselves now.

Or become irrelevant forever.

The penny’s death is signal, not collapse. It signals that fiat currency has reached the endgame of debasement. It cannot afford its own smallest denominations.

Digital money is not coming.

It is here.

The question: what KIND becomes normal?

That penny under glass in Philadelphia. “In God We Trust.”

Trust in what?

Institutions that debased currency until production exceeded value?

Or mathematics that cannot be debased?

The choice exists.

The window is open.

It will not stay open forever.

The funeral is over.

The choice begins.

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