Twenty years after Super Mario 64, one clever individual has solved the mystery of the impossible coin that has plagued observant players, and it has to do with the game's coin spawning mechanics and the geometry of the game level.
When the game spawns coins, it does so in groups of five along a horizontal line. However, in a specific spot in Tiny Huge Island, the level has a slope and only shows four coins. The fifth coin, which should appear at the top of the slope, is uncharacteristically missing.
This is because of the horizontal line where the spawns are placed interacting with the slope. While the first four coins are fine, the fifth doesn't reach the surface. The game then interprets it as just not being there, causing it to disappear and become impossible to collect. This is likely due to a bug introduced when the slope was altered but the coin spawn location was not adjusted for the new height.
Using hacks, UncommentatedPannen loaded invisible items as well as the coin spawners to figure out the mystery and even documented what changes were needed to fix the bug. Namely, by moving the spawn point just a little bit higher so the coin would appear above the ground. Unfortunately, it's not something that players can do and it's unlikely the devs will fix a 20-year-old bug, so the coin remains impossible to collect.
If you want to know the specifics, UncommentatedPannen has a 9 minute video going over the whole thing in exquisite detail.
The game and the bug may be old, but we have plenty of new Mario coming your way. Check out the latest: