http://www.computerworld.com/article/2515435/app-development/moth-in-the-machine–debugging-the-origins-of–bug-.html

The original myth is that the term bug for computer programming glitches comes from computer scientist and U.S. Navy Rear Admiral Grace Hopper, who coined the terms bug and debug after an incident involving Harvard University’s Mark II calculator. In 1945, a Harvard technical team found a moth between points in Relay 70, which they removed and taped in the log book. The story goes that Grace Hopper added the caption “First actual case of bug being found.” The truth, however, is that scientists have been using the term much before this incident. Some people trace the word to an old term for monster.

See link to the article attached.