This is mostly right, I remember this part clearly:

The water block was a custom block for both a CPU and GPU combined into one mass. It was supposed to sandwich a specific CPU series chip and a specific GPU. They used the right CPU series with it, but used the next GPU up in the series... I think it was built for a 3080 or something and they put a 4000 series on it.

They realized their mistake, even during the shoot, but Linus didn't want to spend the time, effort and money into retesting it with the proper components, and just steamrolled ahead with the video.

After all that, their team neglected to return the prototype promptly, and took months to even properly communicate with the manufacturer. During those months they held some kind of gathering, either LTX or one of their LANs, and during the event someone suggested the prototype water block for the silent auction, and Linus agreed, so they auctioned it off and gave the money to charity.

There was some drama about it, and Linus did his usual thing of speaking before thinking and digging his grave even further, then eventually made a public apology. They committed to paying the full price for the prototype, well above $20k, if I recall, so that the company could have a new one created.