Coldcard Firmware Bug Drains 594.48 BTC From Hardware Wallets

Key Point

A Coldcard firmware error disabled secure random number generation across multiple hardware wallet generations, and attackers have drained 594.48 BTC worth about $38.3 million. Coinkite and Block’s Bitcoin engineering team traced the bug to a broken RNG check that made wallet keys depend on predictable serial-number and internal-clock details. Devices running certain firmware released since 2021 get almost no real randomness, and newer models still narrow possible outcomes to about four billion combinations. Coinkite recommends affected users generate a brand new seed on updated hardware and move funds right away, because firmware updates cannot undo weak seeds. Coinkite said Mk3 users who generated a seed after firmware 4.0.1 may be at risk, while Mk4, Q and Mk5 are not affected based on early analysis.

Why it matters: Weak seed generation can turn self-custody into direct key-exposure risk and may reduce trust in hardware wallet security.

Market Sentiment

Bearish, Stress-on, Tech-driven, De-risking.

Reason: The confirmed drain of 594.48 BTC from affected Coldcard seeds creates direct custody-risk pressure for Bitcoin holders.

Similar Past Cases

In 2023, Trust Wallet fixed a browser-extension wallet-generation vulnerability that led to about $170,000 in user losses, and affected addresses created during the vulnerable window required user remediation. (The Block) Difference: The Trust Wallet case involved a browser extension, while the Coldcard case involves hardware wallet firmware and larger reported Bitcoin losses.

Ripple Effect

The main spillover channel is self-custody confidence, because weak seed generation can make a secure-looking wallet dependent on predictable data. If more affected firmware is confirmed, then the issue may spread from isolated wallets to broader hardware-wallet trust. Public-key exposure can also make the risk persist for funds derived from weak seeds.

Opportunities & Risks

Opportunities: When Coinkite and Block close their firmware review, then confirmation that fewer models are affected is a potential stabilization signal for hardware-wallet confidence. If an affected user has a seed generated on Mk3 after firmware 4.0.1, then rotating to a brand new seed on updated hardware reduces key-exposure risk.

Risks: If the review extends the affected firmware set, then reducing reliance on old seeds limits downside from delayed theft discovery. If funds remain on weak seeds after the fix, then the private-key risk may persist despite firmware updates.