A jar of pennies overflowing.
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The penny has finally reached its expiration date. After years of debate, the U.S. Treasury confirmed that the Mint will stop producing new one-cent coins once existing blanks run out, expected by early 2026. The reason is as simple as it is symbolic: it costs nearly four cents to make a single penny.
The decision closes a chapter that began in 1792 with the founding of the U.S. Mint, but opens a more consequential one about how we measure, transfer, and preserve value when digital money dominates and fractionalization is frictionless.
The Real Cost of ‘Making Cents’
For over a decade, the Mint has reported losses on penny production. According to recent estimates, each penny costs 3.7 cents to produce when factoring in metal, labor, and distribution. Rising prices for copper and zinc, combined with inflationary pressure, have turned seigniorage (the government’s profit from minting currency) into an annual loss of $85.3 million in 2024.
Even the nickel now costs more than ten cents to produce (13.78 cents in 2024). Those losses may seem trivial, but they symbolize a broader inefficiency: the mismatch between analog coinage and a digital economy.
As pennies disappear, businesses and consumers must adapt. For cash transactions, totals will be rounded to the nearest five cents, just as Canada, Australia, and New Zealand did when they retired their lowest-value coins. Digital payments, however, will still settle precisely, reminding us that software, not metal, now defines how money moves.
The Hidden Costs of Going Penny-Free
The penny’s departure will trigger a cascade of logistical adjustments. Point-of-sale systems must be reprogrammed for rounding; vending, transit, and parking machines recalibrated; and retailers retrained on how to handle cash without the smallest denomination.
Merchants are advised to publish clear rounding policies, post visible signage, and test new POS software well before the transition. Rounding should occur only on the final cash total, not per item, following Canada’s proven model for fairness.
Friction is inevitable. Some customers may see rounding as a surreptitious price hike, while others hoard coins out of nostalgia. Charities that rely on “penny jars” will need to switch to digital “round-up” programs. For banks and armored carriers, short-term coin supply imbalances are almost certain.
Still, the math is clear: eliminating the penny will save taxpayers $56 million annually. Sometimes fiscal responsibility really does begin with small change.
The Symbolic End of Tangible Value
Beyond logistics, this is a cultural turning point. The penny’s retirement signals that physical money has lost primacy. In a world where more than 90% of the U.S. money supply already exists digitally as ledger entries at banks, the smallest coin’s disappearance feels like a final acknowledgment that value itself has gone virtual.
Microtransactions, fractional pricing, and machine-to-machine payments have long been awkward in the traditional financial system. Credit card minimums and transaction fees make one-cent payments uneconomical. But emerging digital asset technologies (stablecoins, tokenized dollars, and Bitcoin’s Lightning Network) are built precisely for such granular exchange.
Where physical change fails, programmable money thrives.
SATs, Millisatoshis, and the New Digital Denominations
Consider Bitcoin. A single bitcoin (BTC) can be divided into 100 million “satoshis,” or SATs, named for the pseudonymous creator, Satoshi Nakamoto. This divisibility enables transactions worth fractions of a cent, allowing for micro-tipping, streaming payments, or machine-to-machine micro-purchases.
The Lightning Network, a Layer 2 protocol built on top of Bitcoin, uses an even smaller unit for internal accounting: the millisatoshi (msat). One msat equals one-thousandth of a satoshi. While msats are used within Lightning payment channels for precision, they round to whole satoshis when transactions settle on the Bitcoin blockchain.
That level of specificity simply isn’t possible with traditional money. Imagine trying to issue 0.000001 of a penny to reward someone for reading an article or watching a few seconds of an ad. In the analog world, that’s absurd; in the crypto world, it’s routine and incredibly efficient.
But the penny problem isn’t just about cost inefficiency. It’s about capability, too. Physical money can’t scale down far enough to power the modern attention economy or the Internet of Things. Crypto can, although even digital assets can leave amounts too economically insignificant (referred to as dust) to be included in a final transaction.
Loyalty Programs Built on Bitcoin’s Divisibility
Some Bitcoin platforms are even creating brand-specific rewards that leverage satoshi-level precision. Lolli, a Bitcoin rewards app acquired by Thesis in 2025, introduced “mats” as loyalty points earned alongside sats when shopping, playing games, or using their platform. While not a Bitcoin protocol unit, mats provide access to the Mezo ecosystem (a Bitcoin banking platform also built by Thesis) where users can borrow, earn yield, and spend against their Bitcoin without selling it.
These kinds of innovations show how companies are building consumer applications around Bitcoin’s native divisibility. Whether through protocol-level units like satoshis and millisatoshis, or branded loyalty systems that extend Bitcoin’s utility, the infrastructure for micro-value exchange already exists and is being actively deployed.
Business Opportunities Meet Policy Decisions
For merchants, the penny’s disappearance is a wake-up call to become Web3 ready immediately by modernizing payment systems rather than patch them or, worse yet, get left behind entirely. Of course, card networks and mobile wallets will absorb the rounding transition smoothly, but forward-looking retailers should start testing blockchain-based settlement options by exploring stablecoins (digital assets pegged to the dollar) or Bitcoin Lightning payments for small transactions, which could eliminate both rounding headaches and high transaction fees. For example, a coffee shop might let customers pay with a few thousand SATs, settling instantly and cheaply, without ever handling cash or worrying about fractional rounding.
Meanwhile, policymakers are charting a path forward. In July 2025, the House passed the Anti-CBDC Surveillance State Act (219-210), which would prohibit the Federal Reserve from issuing a central bank digital currency. The bill awaits Senate action. Congress has, however, embraced private stablecoins. President Trump signed the GENIUS Act into law in July 2025, establishing the first federal regulatory framework for dollar-backed stablecoins. The legislation requires 100% reserve backing with U.S. dollars or short-term Treasuries.
This approach (blocking government digital dollars while enabling regulated private stablecoins) charts a distinctly American path: preferring private sector innovation. Either way, the penny’s end underscores the need for clear standards around digital divisibility, interoperability, and inclusion.
As One Coin Chapter Ends, Another Begins
In truth, we stopped using the penny long before we stopped minting it. Digital wallets, peer-to-peer apps, and tap-to-pay cards already eliminated physical friction. But by formally retiring the coin, the U.S. is acknowledging that value today moves faster, smaller, and smarter than minted metal ever could.
The smallest coin in our piggy banks may vanish, but the smallest unit of digital value (whether a millisatoshi, satoshi, or stablecoin fraction) will define how we transact in the future. As merchants and regulators adjust to a post-penny economy, embracing crypto’s fractional fluency may not just make sense.
It may make cents obsolete.