This plugin automatically sets the first embedded image as the featured image for new posts that do not have a specified featured image.

wpeb-fix-featured-images.php

<?php

/**
 * Sets the first embedded image as the featured image for a post.
 *
 * @since 1.0.0
 *
 * @param int $post_id The ID of the post.
 */
function auto_set_featured($post_id) {
  // Get the post object
  $post = get_post($post_id);

  // Get out if this isn't a post or if the post already has a thumbnail
  if (!$post instanceof WP_Post || has_post_thumbnail($post_id)) {
    return;
  }

  // Get the first embedded image
  $images = get_posts(array(
    'post_parent'    => $post_id,
    'post_type'      => 'attachment',
    'post_status'    => 'inherit',
    'post_mime_type' => 'image',
    'posts_per_page' => 1
  ));

  // Set the first image as the post thumbnail if it's not already set for another post
  if (!empty($images)) {
    $thumbnail = reset($images);
    $thumbnail_post_id = get_post_thumbnail_id($thumbnail->ID);
    if (empty($thumbnail_post_id)) {
      set_post_thumbnail($post_id, $thumbnail->ID);
    }
  }
}

// Run the auto_set_featured function when a post is published
add_action('publish_post', 'auto_set_featured');

/**
 * Runs the auto_set_featured function to set the first image as the featured image for older posts without a featured image.
 *
 * @since 1.0.0
 */
add_action('admin_init', function () {
  // Check if the transient exists
  if ((int)get_transient('bulk_auto_set_featured') > 0) {
    return;
  }

  // Get all posts
  $posts = get_posts(array(
    'posts_per_page' => -1,
  ));

  // Set the featured image for each post without a featured image
  if (!empty($posts)) {
    array_walk($posts, 'auto_set_featured');
  }

  // Set the transient to indicate that the function has been run
  set_transient('bulk_auto_set_featured', 1);
});