Is it illegal to melt/deface pennies?
The code governing this issue is as follows:
Title 18 United States Code, Section 331
Whoever fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales, or lightens any of the coins coined at the mints of the United States, or any foreign coins which are by law made current or are in actual use or circulation as money within the United States;
Whoever fraudulently possesses, passes, utters, publishes, or sells, or attempts to pass, utter, publish, or sell, or brings into the United States, any such coin, knowing the same to be altered, defaced, mutilated, impaired, diminished, falsified, scaled, or lightened -
Shall be fined under this title or imprisoned not more than five years, or both.
If you do not have fraudulent intent when you deface a penny, then you are not in violation of the law. I was recently in Philadelphia where I visited the Liberty Bell, and Constitution Hall. In the gift center was a machine that would take a penny and flatten it out in the shape of the Liberty Bell or other design for a fee. That being said, I think that melting pennies is not illegal so long as you are not trying to make your own money.