[/QUOTE] That is not a die. It is a printing block (cannot remember the actual name). I have several of these with US coins. Neat! Mine were used to print on paper. I have also seen something similar for printing watch dials. A flat engraved steel die was inked and a powder coated rubber blob was pressed into the block to pick up the ink and then put on a blank watch dial. That may be how the poker chips were printed only automated and not done by hand.
At one time Lost Dutchman had a whole box of them. Well for one thing the mint no longer has melting furnaces capable of melting them down. Their annealing furnaces can soften the metal but not melt it. That means to dispose of them they would have to ship out undefaced dies to someplace that could melt them. That would be a security risk because they might get lost enroute (That happened to a case of Canadian small size dollar dies and is why the reverse of the dollar became the loon design. It was originally supposed to be the regular voyager canoe reverse but that was changed when the case of dies disappeared.) And even it they arrived safely you then have to worry about accounting for every die to make sure one doesn't slip away. But if you deface them first before shipping it doesn't matter if the get lost or one gets "saved as a souvenir" because they can't be used. Also sometimes they aren't actually shipped out directly for melting but are sold as surplus government property by the GSA (Bulk lots, tons of steel. Not the kind of thing your average person would buy, but something a metal dealer might.) Once again they can't have undefaced dies dies possibly getting out so they are defaced before being released to the GSA.
Great point. I'll bet there has not been a working furnace at the mint soon after they began buying strip.
When I was at the Philadelphia mint in 1976 they still had a furnace for melting and casting ingots for the cents and nickels (the clad strip had been made by outside firms since 1965) and they were saying then that they would be taking it out soon. By 1982 the cent planchets were also coming from outside firms. Removing the furnaces and rolling mills made more room for expansion of actual coinage operations.
They deface them because they are sent out to a company to be recycled in to new dies and they want to make sure no one tries to keep one with the face still on it.