End of Penny Production Marks Shift in U.S. Currency Strategy
According to Cointelegraph, the United States Mint in Philadelphia has minted the last penny, valued at $0.01, marking the conclusion of 232 years of penny production and circulation. This decision follows U.S. President Donald Trump's directive to halt penny production, initially targeting 2026 for the final minting. However, the Treasury depleted the templates required for manufacturing the coins between June and September, as reported by Axios.
The cost of producing a penny is approximately 3.7 times its face value, translating to over $0.03 per coin. Despite the cessation of new penny minting, the coin will continue to be legal tender, with over 250 billion physical pennies remaining in circulation. Alexander Leishman, CEO of Bitcoin financial services company River, commented on the situation, noting that inflation has rendered the penny ineffective while increasing the relevance of Bitcoin's subunit, the sat.
Bitcoin was designed as an alternative monetary system with a capped supply of 21 million coins, suggesting that as demand for BTC rises, its price should follow suit. Saifedean Ammous, author, economist, and Bitcoin advocate, explains that technological advancements act as deflationary forces, enhancing production efficiency and reducing the cost of goods and services over time. Fiat currencies, however, fail to capture this deflation due to their ever-increasing supply, leading to diminished purchasing power and higher prices for goods, assets, and services.
Ammous argues that if goods, services, and assets were priced in BTC or another hard money standard, prices would decrease over time. Median home prices measured in BTC illustrate how a supply-capped hard money benefits holders through depreciating prices of goods, services, and assets. The Gold Bureau notes that the US dollar has lost over 92% of its value since the Federal Reserve Banking System's inception in 1913.
Bitcoin reached all-time highs above $126,000 in October, while the US dollar faced its worst year since 1973, according to market analysts at The Kobeissi Letter. The USD has lost about 40% of its purchasing power since 2000, with a 10% decline in value year-to-date as of October. Despite these trends, economist Paul Krugman remains critical of cryptocurrencies, emphasizing the dollar's ease of use compared to Bitcoin, which he argues is challenging for the average person to hold and transact with. "The whole point about the dollar is it’s really easy to use, and Bitcoin is not easy to use," Krugman stated during a podcast with Hasan Minhaj.
