A plug in coins is the hole in the middle of the coin that is filled with a cheaper metal.
This phrase dates back to the 1880’s and used to refer to coins — not just nickels but any coin — that had been tampered with and damaged. Removing the plug on any coin rendered them worthless as they were not considered to be legal tender due to tampering.
In time the phrase came to mean someone or something that was absolutely worthless.
Historically Speaking 