An exchange may have accidentally set fire to $8.5 million worth of Bitcoin – that’s one of the leading theories after an unidentified wallet sent 107 BTC to an address from which the funds can never be recovered.
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Conor Grogan, head of product operations at Coinbase, said the fire was most likely caused by an exchange making a mistake during a cold storage transfer.
No public explanation from anyone involved
Five separate Bitcoin addresses carried out the transfers on Monday, all sending funds to a long-standing fire address starting with “11111,” according to onchain data shared by Galaxy Research.
The move brought the total amount of Bitcoin ever sent to that address to 807 BTC, now worth nearly $60 million, based on data from blockchain platform Arkham.
1111111111111111111114oLvT2 corresponds to Hash160 = 0x000000000000000000000000000000000000000000 (twenty zero bytes). Base58Check that with the P2PKH version byte and you will get this address. Because finding a public key whose Hash160 consists of all zeros would require either: pic.twitter.com/WAii2UbQ0U
— Galaxy Research (@glxyresearch) May 27, 2026
The 107 BTC destroyed made the event one of the largest reported Bitcoin burns of 2026 so far. What made it even more striking was the age of the coins; most of them had sat untouched for more than a dozen years, acquired when Bitcoin was trading below $600. According to data from TradingView, that early purchase had grown by 12,700% at current prices.
What happens when Bitcoin is burned
Bitcoinunlike some other cryptocurrencies, does not have a built-in mechanism to remove coins from supply. Burning them means sending money to an address that has no known private keys: the coins appear in the ledger, but cannot be touched or moved by anyone.
The brand address used in this case had already been used before, including by the Stacks project, which sent 40 BTC to it in September 2015 for a namespace registration.
Galaxy research offered several possible explanations for why someone would walk away from an $8.5 million windfall.
The company raised the possibility of tax loss harvesting, destruction of funds due to ties to illegal activities, or even a mistaken transfer by an artificial intelligence agent.
This is fascinating to me. Someone bought 107 BTC 12 years ago, weathered nine, yes nine, over 50% downturns, watched it grow to $8.5 million only to send the coins to a burn account this week, permanently destroying them. Smh. Theories incl: kidnapping, taxes, religion, divorce, rogue AI agent.. https://t.co/BWPk2eH1Dg
— Eric Balchunas (@EricBalchunas) May 27, 2026
No clear link has been found between the burned coins and known hacks or cyber attacks.
Bloomberg ETF analyst Eric Balchunas also weighed in, raising the idea of one rogue AI agenta kidnapping scenario or tax-related motives behind the destruction.
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The theories are piling up, but there are no answers yet
The fire address itself has a documented history. Reports say the address was used by Stacks years before this latest transaction, giving it a verifiable record on the chain as a destination for deliberate destruction of coins – and not just a random wallet.
Analysts have not yet found a definitive answer to what happened Monday. The identity of the sender remains unknown.
Featured image from Unsplash, chart from TradingView