How much is a penny worth if you melt it?

Each 1¢ penny is worth approximately 2.3860¢ in scrap metal. 2021. Now that we know how much “revenue” we can get per penny, we need to figure out how much it would cost to obtain that revenue.

matthewjcheung.medium.com - Melting Pennies is Profitable?! | by Matthew Cheung - Medium

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Melting Pennies is 139% Profitable

If the copper in pennies is worth more than 1 cent, why aren’t people melting pennies to get rich?

You may have read that a penny costs the US Mint more than a penny in material costs. Is this true? Should we melt pennies to get rich? We will explore this topic.

Background

For much of their history, US pennies were mostly copper. Pennies made on or before 1982 were, made with 95% copper and 5% zinc. (Post-1982 pennies are 2.5% copper and 97.5% zinc)¹. From this, it would seem that it’s a good idea to melt pennies for their copper. Though it’s currently not legal to melt pennies for monetary gain², let’s temporarily imagine the US phased out the penny like Canada did in 2012³, in which case it would potentially be legal to melt down pennies.

Is Melting Pennies Profitable?

To see how much revenue we could make from melting pennies, we should calculate how much we could sell the constituent metal for. Melting a penny made after 1982 would result in about 0.8613¢ in scrap metal, as of February 5, 2021 copper and zinc spot prices⁴ ⁵. Clearly these pennies aren’t worth melting down.

Melt value of a >1982 penny. Table by the Author. Feb. 2021.

But I mentioned previously that pennies made on or before 1982 had more copper. Perhaps they’re worth more?

Yes, they are. Each 1¢ penny is worth approximately 2.3860¢ in scrap metal.

Melt value of a ≤1982 penny. Table by the Author. Feb. 2021.

Now that we know how much “revenue” we can get per penny, we need to figure out how much it would cost to obtain that revenue. In other words: how much does it cost to melt down the penny?

To calculate this, we need a little bit of science. We need to calculate how much energy it takes to increase the temperature of the metal to the melting temperature and how much energy it takes to melt the metal once at the melting temperature. Doing this calculation for pennies made on or before 1982, we find the energy required to melt the metal in a penny to be 1854.6 J⁶ ⁷ ⁸. Energy required to melt a ≤1982 penny. Table by the Author. Feb. 2021.

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And finally, how much does it cost to do the melting? That is a simple look up of how much energy costs. The cheapest common method of heating using natural gas. With natural gas, the cost to energy to melt a penny is 0.00056¢⁹ ¹⁰ ¹¹. Note that these calculations assume 100% efficiency in heating, meaning that all of the energy in the natural gas goes into heating the pennies and none is wasted heating other things. In reality, natural gas furnaces are approximately 80-95% efficient¹². So this will increase energy consumption by some amount. Cost of energy required to melt a ≤1982 penny. Table by the Author. Feb. 2021.

Conclusion

We’ve seen that a penny melter can get 2.3860¢ for each investment of 1.00056¢ (the cost of a penny and natural gas to melt the penny). Therefore, it is technically profitable to melt pennies. Again, melting pennies for a profit is currently illegal under US law. (And you can’t export the money to another country to do the melting there either.) But if it was legal, the decision to melt pennies for profit is ultimately up to you. Here are the challenges that I foresee:

Sorting through pennies will become harder and harder to do as time progresses, since the supply of pennies made on or before 1982 will gradually decrease. And new post-1982 pennies are always being created. The amount of pennies you’ll need to melt per unit time will be incredibly high to make a reasonable salary. Do you have the space to store and the means to transport large amounts of metal?

For the time being, I personally will not be melting pennies. But I do look forward to the day where we get rid of the penny.

Interested in other money-related topics?

References

Sources accessed February 9, 2021.

matthewjcheung.medium.com - Melting Pennies is Profitable?! | by Matthew Cheung - Medium

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