More than $70 million worth of Bitcoin was stolen on July 30 after an attacker drained 1,196 wallet addresses in just 41 minutes..the attacker took 1,082.65 BTC by exploiting a firmware vulnerability in Coldcard, the Bitcoin only hardware wallet developed by Canadian company Coinkite

The issue dates back to a firmware integration mistake introduced in March 2021. Instead of using the STM32 chip's hardware random number generator to create wallet seeds, affected devices relied on a deterministic software pseudorandom number generator. Researchers at Block explained that if an attacker can estimate key device information, including the chip's unique ID, timer state, and previous RNG activity, they may be able to recreate possible seed phrases offline. Those candidate seeds can then be tested against public Bitcoin addresses until a match is found.

Coinkite released emergency firmware updates for all affected Coldcard models on July 31

However, simply updating the device does not fix wallets that were originally created with the vulnerable firmware. Users whose seeds may have been exposed are being advised to generate a brand new seed using the patched firmware and transfer their Bitcoin to the new wallet. Reusing the old seed, even on an updated device or another wallet, keeps the original weakness.

Block's investigation traced the bug to Coldcard's production configuration. A software setting caused the wallet to fall back to MicroPython's Yasmarang pseudorandom number generator instead of the intended hardware RNG. That fallback was seeded using the device's unique ID and timer values, then generated all future randomness without collecting fresh entropy, making the output far more predictable than intended

Coinkite estimates the flaw reduced effective entropy to roughly 40 bits on the Mk3 and around 72 bits on the Mk4, Mk5, and Q models, far below the 128-bit security expected from a standard 12-word BIP-39 seed. Researchers noted that the real world difficulty of recovering a seed depends on factors such as device information, boot timing, previous RNG calls, and the cost of testing candidate wallets. They did not publish a practical brute force benchmark.

Whether a wallet is vulnerable depends on the firmware version that created the seed, not the version currently installed. affected versions include Mk3 firmware 4.0.x through 4.1.9, Mk4 and Mk5 firmware before 5.6.0, Q firmware before 1.5.0Q, and older edge builds. Wallets generated using at least 50 private, independent dice rolls are not affected by this bug alone. While a strong BIP-39 passphrase adds another layer of protection, Coinkite still recommends replacing any seed created with vulnerable firmware. Multisignature wallets are only protected if they are not built entirely from affected Coldcard devices

The attacker has not been identified. Galaxy Research, which analyzed the theft, said the transaction pattern was unusual and found no other Bitcoin transactions in the previous 30 days using the same 30 sat/vB fee with no change output. Even so, the firm cautioned that this pattern identifies the operator behind the sweep, not necessarily the theft itself, since a legitimate wallet owner could produce similar transactions.

The disclosure comes only weeks after Coinspect revealed the "Ill Bloom" vulnerability, another weak random number generation flaw that has been linked to more than $5 million in stolen cryptocurrency across Bitcoin, Ethereum, Tron, Rootstock, and Polygon