The US government is considering eliminating the penny, but stopping just at the penny ignores the complicated issue of replacing the nickel. The US Mint loses money on every penny and nickel it mints, but makes a profit from its sale of dimes and quarters.
If the Mint stopped producing pennies, it would save about $85 million a year, but this could lead to bigger problems with nickels. Mr. Jeppson, a former chief executive of the US Mint, warned that eliminating the penny could increase nickel production costs due to fluctuations in demand.
There are potential consequences for other countries that have already eliminated coins. Canada did it in 2012, and the Defense Department stopped using pennies on its bases in the 1980s. However, adopting such policies in the US would require significant changes to laws and regulations, as well as store policies for cash transactions.
Some experts suggest eliminating both the penny and nickel could simplify payments but also lead to complications with making change. The US would be an outlier among its peer countries if it had only two coins: dimes and quarters. A recent study estimated that cash was used for 31% of all payments, a trend already underway in the country.
Ultimately, eliminating coins could have a significant impact on tax collection and revenue, potentially leading to tens of billions in lost tax revenue each year due to unreported cash transactions.
Source: https://www.nytimes.com/2025/02/19/upshot/penny-trump-nickel-elimination.html