What is going on

Had a random 2 x 10 on wall in garage...took it down and had 2 holes...the ones on the left and one I made. The ones on the left had black insulation...sheetrock seems clear. Doesn't seem to be wet. Am I being too optimistic? When I touch the insulation black smoke comes out. Basically...how much longer do I have left and what can I do? Will post photos in comments.