In one of the most severe hardware security failures in Bitcoin's history, an attacker executed an automated, coordinated sweep draining 594.48 BTC (valued at ~$38 million) from roughly 500 single-signature Bitcoin wallets in just 25 minutes.The attack targeted wallets generated on Coldcard Mk3 hardware devices running firmware version 4.0.1 (released in March 2021) or later. The flaw was traced to a compilation build setting that accidentally bypassed the device's Hardware True Random Number Generator (TRNG). Instead of drawing true entropy from physical hardware noise, the seed generation algorithm fell back to a software pseudo-random generator seeded with predictable device data, including chip serial numbers and internal clock registers.Because chip serial numbers and time parameters are far from infinite, this bug drastically collapsed the cryptographic search space—reducing the theoretical $2^{128}$ or $2^{256}$ search space down to roughly 40 bits of effective entropy on affected devices. An attacker using modern GPU clusters or cloud compute was able to brute-force and pre-compute the resulting 24-word recovery phrases, revealing the private keys to hundreds of dormant and active wallets.
The Execution & The "Entropy Trap"
The incident represents a classic "entropy failure"—where a system appears secure because it uses standard BIP-39 mnemonic words, but the underlying generation mechanism was entirely deterministic and guessable.
Key Mitigations & Lessons for Web3 Security
This exploit highlights that offline hardware does not automatically guarantee cryptographic randomness. To protect against seed entropy failures: