Manufacturing Crisis: Why US Coin Production Costs Have Spiraled Out of Control

The economics of coin manufacturing in the US have taken a dramatic turn for the worse. The numbers tell a troubling story: as of 2022, producing a single nickel now requires 10.4 cents in materials and labor — a staggering jump from just 7.4 cents two years prior. That’s a 40.2% cost increase eating into what the coin itself is worth.

Dimes and quarters aren’t faring much better. Production costs for dimes have climbed 34.9%, rising from 3.7 cents to 5 cents between 2020 and 2022. Quarters experienced a 28.7% surge, with manufacturing expenses jumping from 8.6 cents to 11.1 cents in the same timeframe. The margin erosion is relentless across the board.

Why the Cost Explosion?

Inflation in raw materials and energy expenses has hammered coin production. Metals — particularly the nickel-copper alloy coating that covers most US coins — have become significantly more expensive to source and process. These cost pressures have forced the US Mint to confront an uncomfortable reality: they’re losing money on every piece of currency they produce.

The Metal Composition Pivot

To combat this crisis, the US Mint has proposed shifting the metal blend used in nickels, dimes, and quarters. Currently, these coins feature a nickel-copper coating over a copper core, typically in a 75/25 ratio. The proposed change: bump copper to 80% and reduce nickel to 20%.

This seemingly modest adjustment could deliver meaningful savings. Based on 2022 production volumes, the Mint estimates annual savings of approximately $12 million. The operational switch would take roughly one year to implement, assuming Congressional approval is secured. Reassuringly, testing indicates public-facing impact would be minimal — vending machines and other coin-dependent systems would continue operating normally.

Congress Weighs In

A bipartisan Senate bill has been reintroduced to grant the US Mint authority to modify coin metal compositions without perpetually seeking legislative approval for each change. Senators Margaret Hassan (D-NH) and Joni Ernst (R-Iowa) are leading the charge. This represents a second attempt; a similar measure passed the House with overwhelming support in December 2020 but stalled in the Senate.

Ernst has been vocal about the absurdity of the situation, noting that the cost-to-production ratio makes no economic sense — particularly for dimes. The legislative momentum suggests policymakers recognize this isn’t a minor bureaucratic issue but a systemic problem demanding solutions.

The US Mint continues exploring alternative metal compositions beyond the copper-nickel adjustment, including copper-plated steel pennies, though preliminary assessments suggest such options may prove costlier than current penny manufacturing (which stands at 2.7 cents per unit). The agency remains committed to finding sustainable solutions to an increasingly untenable financial equation.