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January 25, 2025

Could Dogecoin Save the Government Money?

Could Dogecoin Save the Government Money?

Imagine living in a world where Dogecoin is the unsung hero of reducing government spending. The Department of Government Efficiency (DOGE) is searching for smart ways to cut costs, and Dogecoin, a cryptocurrency that began as a joke, is in their line of sight. Who would have thought?

What is DOGE?

DOGE was established during the Trump administration with a clear mission: to make the government run more efficiently and save taxpayer dollars. They’ve recently taken a closer look at Dogecoin, which is generally viewed as a meme coin. But Elon Musk, an outspoken Dogecoin supporter, has been pushing it as a way to improve government spending.

Just the other day, DOGE tweeted about how much it costs to mint pennies. Apparently, the U.S. Mint spends about 3 cents to make each penny, which is a bit overkill considering the penny itself is worth only one cent. This leads to taxpayers spending approximately $179 million in FY2023 to mint 4.5 billion of those useless coins.

The penny costs over 3 cents to make and cost US taxpayers over $179 million in FY2023.
The Mint produced over 4.5 billion pennies in FY2023, around 40% of the 11.4 billion coins for circulation produced.
Penny (or 3 cents!) for your thoughts.
— Department of Government Efficiency (@DOGE) January 22, 2025

How Much Does it Cost to Make a Coin?

Now, pennies aren’t the only coins that cost a fortune to mint. A nickel costs around 14 cents to produce, and since the price of zinc has skyrocketed, it now costs over 3.7 cents to mint a penny. This situation highlights a serious flaw in how we currently produce coins.

Interestingly, the U.S. wouldn’t be the first country to stop minting its one-cent coin. Canada made this move back in 2012 because it was simply too expensive. Back then, it cost about 1.6 cents to produce each penny, while the actual value remained at one cent. They rounded prices to the nearest five cents for cash transactions, but electronic payments were unaffected.

Dogecoin: The Savior?

Elon Musk is reportedly considering the use of Dogecoin to help cut government expenses. Dogecoin, a decentralized cryptocurrency, has some advantages over traditional currency. Its lower transaction costs and decentralized nature could potentially streamline certain government functions.

But then there’s the caveat: sometimes it costs more to mine a Dogecoin than it’s worth. Factors like electricity prices and mining hardware efficiency are significant. Like Bitcoin, mining Dogecoin consumes a lot of energy, though some miners use less energy-intensive tech.

In regions with high electricity costs, it might cost more to mine a Dogecoin than its market value. On top of that, if your mining hardware is outdated or inefficient, you might find yourself losing money mining Dogecoin. When prices drop, some miners shut down operations; when they surge, mining becomes profitable.

Crypto’s Environmental Impact

The economics behind mining any cryptocurrency, including Dogecoin, can vary wildly based on local circumstances. While traditional mining methods contribute to high carbon footprints, the industry is making strides toward sustainability. More projects are adopting Proof of Stake (PoS) mechanisms and using renewable energy for mining.

Still, the volatility of Dogecoin is a big worry. The price can swing wildly, making it risky for stable government operations. Its unpredictable value could undermine financial stability and investor confidence, both essential for any asset being considered for federal use.

Summary: The Future of Digital Coin Trade in Government

While Dogecoin and other cryptocurrencies offer some benefits, they aren’t stable or widely accepted enough to replace traditional currency in government operations at this time. The volatility, regulatory uncertainties, and lack of direct integration into government financial systems make it impractical for now.

Nonetheless, the fact that DOGE is considering Dogecoin signifies growing interest in innovative solutions to cut federal spending. As the crypto landscape evolves, the chances of digital currency playing a role in government operations may improve. For now, they’re focused on the best ways to manage resources, whether through traditional or emerging technologies like Dogecoin.

In short, the road to incorporating digital coin trade into government operations is complicated and full of hurdles. But the quest for efficiency and cost savings keeps pushing us forward. The possibility that cryptocurrencies could transform government efficiency is certainly worth keeping an eye on.

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Egor Romanov
About Author

Egor Romanov is an experienced crypto analyst, professional trader, and author of trading strategies and the Cryptorobotics blog, where he shares his knowledge about cryptocurrencies and financial markets.

Alina Tukaeva
About Proofreader

Alina Tukaeva is a leading expert in the field of cryptocurrencies and FinTech, with extensive experience in business development and project management. Alina is created a training course for beginners in cryptocurrency.

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