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Coldcard hack highlights risks in Bitcoin self-custody and key generation

Bitcoin Magazine says the theft stemmed from a firmware bug in the device's entropy, and estimates suggest more than 11,000 bitcoins were moved to custodial exchanges last week.

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Bitcoin Magazine reports that a recent Coldcard hack has triggered renewed debate over self-custody practices for retail Bitcoin holders, with consequences that may take months to show. According to the outlet, some estimates say more than 11,000 bitcoins were moved to custodial exchanges last week as users reacted to the issue. It also cites reports that north of 1,300 bitcoins were stolen, with some estimates as high as 2,000 coins. Bitcoin Magazine attributes the breach to the hardware wallet's key generation process, saying the hackers exploited a failure related to entropy and that a firmware bug led to private keys that were easier to guess than intended. The outlet describes Coldcard's security design as largely focused on preventing malware data exfiltration, including airgapped operation and protocols intended to transfer information without direct sharing of storage media. Despite the reported loss, Bitcoin Magazine argues that abandoning self-custody would undermine the core premise of Bitcoin, and instead calls for more resilient ways for individuals to hold their own keys.

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