Boot to internet recovery.
Erase.

@user-DeoLuXvBmb If you can boot into Recovery Mode and you're on the Recovery Assistant screen you do have an option to erase the Mac if you don't have a user password or recovery key (it's an item in the Recovery Assistant menu item).

How? When we hold down the power button on an M1 mac and open startup options it asks for a recovery key, which we don't have.

But we can't boot into Recovery mode because we don't have the key..

That should be the Recovery Assistant screen and there will be a menu in the menu bar named "Recovery Assistant" - click it and you should see an item to erase the Mac.

There's not - there's a window that pops up requesting the recovery key with no other options aside from enter the key, shutdown or reboot.

If it is M1, use another Mac with Apple Configurator.

Download the appropriate IPSW from https://mrmacintosh.com/apple-silicon-m1-full-macos-restore-ipsw-firmware-files-database/ 



for appropriate port information and procedures
https://support.apple.com/guide/apple-configurator-mac/revive-or-restore-a-mac-with-apple-silicon-apdd5f3c75ad/mac 
https://mrmacintosh.com/restore-macos-firmware-on-an-apple-silicon-mac-boot-to-dfu-mode/

Do you mean you are stuck at the activation screen as it's locked to an apple account!?

I had this recently, without the bypass key you are left to contact the account holder for the password. If not that, Apple support to remove the activation lock with appropriate proof or purchase documentation.

On a side note, it was the first time I have ever had a bypass code work ever. Macbook 2020 T2 chip. Nice.

I’ve run into a couple of stances where the personal recovery key doesn’t work… in that instance I go to the top left and there’s an extra option in the drop down for ‘erase’. Didn’t use to be there.

on M1, there’s no network recovery, just local recovery that gets updated when the device updates to the next OS:

Top Menu bar. There is only one selectable item there, and there you'll find "erase this Mac" as an option.

Thanks, I think this is our only option.

Thanks but there's nothing in the menu bar..

Click on Recovery Assistant and you will see 3 options, Erase Mac is the 3rd option. 

Has anyone done this with an M2?

@dpwlg Yes, using Apple Configurator 2 to Restore an .ipsw file works for M2 series Macs as well.

Did you ever find a solution. This is same issue that I am having and we are stuck on this screen.

Found a solution that worked for me.

I downloaded this app https://bitbucket.org/twocanoes/dfu-blaster-public/downloads/

followed the instructions to put the machine into DFU mode. Ran the app above forced DFU mode and was then able to reset the device using Apple Configurator.