All credits to zoinknoise, I found this at Romhacking: http://www.romhacking.net/hacks/5008/
"Thanks to the recent decompilation efforts, it’s now known that this texture is displayed in the wrong format by the game, resulting in
black garbage pixels. Since video game smoke of this era was often depicted with black garbage pixels, the mistake went unnoticed for over two decades. This patch corrects the error by displaying the texture correctly as proper transparent smoke. It does not add any new art; the texture has been inside the ROM all along.
At build time, this will compile the texture into IA16 format (correct) instead of RGBA16 (incorrect)."
MysterD
Prince Frizzy
Colton G. Rushton
Víctor Díez García
n64