The Future of the Nickel: Keep It, Replace It, or Erase It?

This is the third Centsless paper on the five-cent coin, and the first to read the earlier two together at the level of a policy decision. The Machine Test (July 2026) found that the machine-impact condition attached to a cheaper nickel cannot currently be evaluated against any public evidence base. The Nickel-to-Dime Problem (August 2026) found that the enacted state rounding frameworks it examined, and the federal bill, fix the rounding increment at five cents, and that the federal procedure for discontinuing a coin is not connected to any rounding rule.

This paper asks what those two gaps mean for the choice the United States now faces: retain the current nickel, replace its composition, or discontinue the denomination. It builds a three-scenario Coinage Decision Framework and finds a measurement asymmetry. The cost the federal government reports precisely every year, the Mint's unit cost and negative seigniorage, is insufficient, by itself, to decide among the scenarios. The figures that would decide it, conversion costs borne by machine owners, the distribution of a changed rounding increment, and net seigniorage after dime substitution, are unmeasured or only partly estimated. The paper separates resource costs from transfers and shows why a Mint production loss and a consumer rounding estimate cannot be compared as the same kind of cost. Its conclusion is a statement about the record, not about the merits: net savings have not been demonstrated for replacing or erasing the nickel, and twelve specific studies would allow the comparison to be made.

The cheapest coin to manufacture cannot be identified as the cheapest coin to use. Net savings have not been demonstrated for either replacing or discontinuing the nickel, because the decisive variables have not been measured on a basis that would support a decision.

The best-measured cost is insufficient, by itself, to decide among the scenarios. The Mint reported 13.31 cents of unit cost and 50.9 million dollars of negative seigniorage on the nickel in fiscal 2025. The figures that could move the decision sit outside the Mint's ledger and have not been measured; their scale is unknown, which is the point.

A fiscal loss, a resource cost, and a transfer are three different things. Negative seigniorage is an accounting difference between issuance value and reported cost. Rounding gains and losses are mostly transfers between cash customers and merchants. The paper never adds or compares them.

Discontinuing production and changing the settlement increment are separate decisions. The paper examines discontinuation in two parts: Erase A, in which production stops and five-cent settlement continues on the existing stock of coins, and Erase B, a subsequent and separately decided transition to ten-cent settlement.

Twelve studies would let the comparison be made. Five restate the conditions The Machine Test set for a verifiable machine-impact finding. The rest cover net seigniorage under each scenario, post-penny nickel demand, the distribution of a changed increment, the tie rule a dime increment requires, and a conformance map from any phase-out plan to the rounding statutes.

The cover presents KEEP / REPLACE / ERASE; the technical analysis uses Retain / Replace / Erase.

Keep (Retain). Keeping the 75% copper / 25% nickel coin carries the best-measured cost of the three scenarios: the reported fiscal loss of 50.9 million dollars in fiscal 2025. Retention also preserves the five-cent settlement increment that every state framework examined in the underlying research and the federal bill assume, every coin validator calibrated to the current coin, and the familiarity of cash users with the denomination. No study has estimated the value of those preserved assets. Retain therefore has a precisely measured cost and an unpriced benefit, an asymmetry that biases any comparison toward change, because only one side of the ledger has a number.

Replace. Prescribing a cheaper composition would narrow the Mint's reported loss for each modeled candidate; on current evidence it would not close it. Whether it produces net savings for the country depends on what happens at the coin slot. If the prescribed coin is accepted by the installed machine base without modification, conversion costs approach zero. If it is not, recalibration and replacement costs fall on private operators, and the industry figures in the record, 2.4 billion to 10 billion dollars, were assessed by the Government Accountability Office as likely overstated and were never independently validated. The paper also identifies an open question of statutory interpretation: the enrolled text describes a layered construction, while all three Mint candidates are homogeneous alloys.

Erase. Discontinuing the denomination is examined in two parts because the law keeps them apart. In Erase A, production stops and five-cent settlement continues on the existing stock of coins, which remain legal tender; its costs are the unmeasured fiscal and operational effects of a shrinking nickel supply. In Erase B, a subsequent and separately decided transition to ten-cent settlement, the decisive questions are the distribution of a changed increment across households and merchants and the speed at which statutes, point-of-sale systems, and the coin supply would adapt. The one public estimate of a dime increment, from the Federal Reserve Bank of Richmond, embeds a tie rule for totals ending in five cents that no legislature has written.

The paper separates three measures that public discussion often merges. A Mint production loss is a fiscal accounting figure: the difference between issuance value and reported cost. The resources the country would actually save under a different policy depend on which expenditures would cease, which fixed costs would remain or be reallocated across the Mint's other denominations, and what additional production the Federal Reserve would order in substitution; none of those quantities has been published. Rounding gains and losses, by contrast, are predominantly transfers between two private parties, cash customers and merchants, whose policy relevance is distributional rather than fiscal.

Because these measures answer different questions, the paper never nets them against one another. A Mint loss and a consumer rounding estimate cannot be compared as if they were the same kind of cost, and the Coinage Decision Framework labels every cell by evidence type, from official reported figure to unmeasured, so that a comparison becomes possible only where the evidence supports one.

Under the enrolled Common Cents Act, Section 6 would govern discontinuing production of a coin, and nothing would govern a change in the settlement increment: Sections 3 and 4, and every state framework examined in the underlying Centsless research, would remain written to five cents. Dime-based rounding would not appear to qualify for the specific safe harbor Section 4 establishes for adherence to Section 3's five-cent provisions, and at a ten-cent increment a total ending in five cents falls exactly halfway between settlement amounts, with no tie-breaking rule in any existing table.

That sequencing gap is not a new finding of this paper. It is the central finding of The Nickel-to-Dime Problem, restated here against the enrolled text and carried into the economic comparison. This paper's contribution is the broader comparative framework: what each of the three paths turns on, and what remains unmeasured on each.

The paper identifies twelve specific studies that would let a reliable economic comparison be made, each, to the authors' knowledge, not publicly available today. Five restate the conditions The Machine Test set for a verifiable machine-impact finding: a census of coin-accepting machines, an inventory of the validator layer, a classification of recalibration capability, a standardized per-machine cost methodology, and a mechanism to measure realized costs after any change. The remainder cover field validation of the composition actually prescribed, a Treasury estimate of net seigniorage under each scenario, a Federal Reserve forecast of post-penny nickel demand, a distributional study of a changed increment, a tie-rule analysis for a dime increment, a conformance map from any phase-out plan to the rounding statutes, and a realized-cost record of the penny transition.

The legislative snapshot in the paper records 23 states with enacted cash rounding authority as of October 18, 2026, of which 19 carry general-retail authority, verified against the Centsless legislation tracker. Legislative status, including the status of H.R. 10167, is stated as of October 24, 2026, the paper's research cutoff, and should be re-checked against current sources.

Is the cheapest coin to manufacture necessarily the cheapest coin for America to use? The evidence does not allow a yes. It does not allow a no either. The Mint can state precisely what the nickel costs to make, but no public document states what a replacement coin would cost the people who own coin-accepting machines, what a dime increment would cost the people who pay in cash beyond one survey-based estimate that depends on an unwritten tie rule, or the net fiscal effect of substituting dimes for nickels.

Net savings have not been demonstrated for replacing or erasing the nickel. That is a statement about the record, not about the merits of any path. A decision made on the Mint's unit cost alone would be made on the one number that is known while leaving the numbers that matter unpriced. The twelve studies in the paper would let the comparison be made. Centsless takes no position on which coin the country should use.