Bitcoin security bastion Coldcard faces estimated $130 million loss due to firmware vulnerability

The aftermath of the security incident involving the Coldcard hardware wallet, once considered the 'gold standard' of Bitcoin security, is spiraling out of control. On August 4, 2026, Galaxy Research released an analysis indicating that total losses from this hack could reach up to $130 million. The situation, which began with a security advisory published on August 1, has escalated into a systemic crisis in just four days, sending shockwaves throughout the market.

In particular, this incident has acted as a catalyst, prompting 'whale' wallets that had been inactive for over a decade to move their funds. As security-conscious long-term holders begin to doubt the safety of hardware wallets, large-scale fund movements aimed at asset protection are being observed. This is evolving beyond a simple individual hacking case into a broader issue of trust in the entire Bitcoin storage infrastructure.

According to detailed analysis by Galaxy Research, the theft of a total of 1,596 BTC from approximately 7,300 addresses has been confirmed so far. This is the sum of three major attack waves and 14 smaller incidents. Galaxy estimates that if the damage from an as-yet-unconfirmed 'fourth attack wave' is included, the total stolen assets will exceed 2,055 BTC.

Galaxy Research has high confidence in the 1,596 BTC theft confirmed to date and projects that the total amount will reach $130 million if the unconfirmed fourth wave is included.

The root cause of this incident has been identified as a seed generation flaw in Coldcard firmware distributed in 2021. This vulnerability, related to the STM32 hardware random number generator (RNG), remained latent for about five years before being actively exploited recently. The manufacturer, Coinkite, has officially acknowledged that seed phrases generated via the affected firmware are at risk of exposure to attackers and has urged users to exercise caution.

Crisis Timeline: August 1–4, 2026

Damage reports starting from the beginning of August increased exponentially every day, shocking users. The estimated damage, which was initially at the $70 million level, surpassed $100 million in just three days, and it is expected to be recorded as one of the worst security incidents in the history of hardware wallets.

• August 1, 2026: The Hacker News reports $70 million in Bitcoin theft.
• August 2, 2026: Damage scale adjusted upward to $89 million following reports by CoinDesk and PYMNTS.
• August 3, 2026: Fortune confirms $116 million in losses and raises the possibility of additional damage.
• August 4, 2026: Galaxy Research analyzes the possibility of reaching a total of $130 million if unconfirmed attacks are included.

The aftermath of the security incident was immediately reflected in the behavioral changes of long-term holders in the market. On Monday, August 3, 2026, it was confirmed that a Bitcoin wallet that had been dormant for 12 years moved funds worth $31 million. This is interpreted as part of a broader movement by whales to relocate assets to a safer environment in response to the Coldcard security breach.

Coinkite is urging all users using the affected firmware to immediately move their funds to a new address. This flaw, which occurred in a device marketed as the safest storage medium, has left a deep scar on the community's trust in hardware security. Industry experts predict that this incident will serve as an important turning point for strengthening security verification standards and audit procedures for hardware wallet manufacturers in the future.

The Fourth Wave and Unidentified Risks

Galaxy Research warned of the possibility of additional damage occurring beyond the three confirmed attacks. In particular, signs of a recent attack, dubbed the 'fourth wave,' are proceeding in a more sophisticated manner than before, making it time-consuming to determine the exact scale of the damage. Galaxy expressed a cautious stance that the damage could exceed $130 million if the data currently being analyzed is confirmed.

This incident clearly demonstrated the limitations of the 'offline security' provided by hardware wallets. This is because it proved that a firmware-level flaw can become a path for asset theft even if the user does not connect the device to the internet. In the Bitcoin community, voices are gaining traction that this situation should serve as an opportunity to adopt decentralized security solutions such as multi-sig rather than relying on a single hardware wallet.

In conclusion, the Coldcard hacking incident is an event that once again highlights the vulnerabilities in cryptocurrency storage technology. As the scale of the damage continues to grow as of August 4, 2026, users must strictly adhere to the manufacturer's official recommendations and double-check that their assets are being managed on a secure firmware version. The final economic and psychological repercussions of this incident are expected to have a lasting impact on the market over the coming months.