Just while waiting for another shoe to drop, especially in the bizarre fraud accusation against EndtheFed
https://bitclubnetwork.com/fraud/1/lerdbaron.html , I thought I'd crunch a few numbers in my spare time.
These worldwide MLM/Ponzi schemes can be huge, tens and hundreds of millions of dollars is quite common.
For example, the original promoters of BitClubNetwork came to the notice of the anti scammers over at
http://behindmlm.com/companies/bitclub-network-review-zeek-ponzi-veterans-at-it-again/ because they were associated with the promotion of Zeek Rewards, a huge Ponzi with a MLM referral scheme attached.
The Zeek receiver has so far clawed back and redistributed
$246,000,000 !!
http://www.zeekrewardsreceivership.com/This money has been reclaimed from "Net Winners" through the US legal system, so the absolute attraction of anonymous Bitcoin for these sort of scammers is obvious, despite the fact that, according to one of their die hard shills, BitClub Network in actually based in Romania.
http://www.moneymakergroup.com/Bitclub-Network-Bitclub-t478335.htmlThis is according to SecondsOld, a serial MLM pumper who actually dabbles in altcoins on here and has the only BitClub Network signature I have seen.
https://bitcointalk.org/index.php?action=profile;u=251793He is currently pumping BitClub and BitBillions GBBG, famous on here as the AussieStriker echo chamber, and for its incredibly anally complicated methods of creating money out of nothing.
https://bitcointalk.org/index.php?topic=147613.0He was actually paying new
mugs investors $100 cashback to
mire themselves in the BitClub web grasp the opportunity of a lifetime and sign up on his downline.
BitClub is the greatest passive opportunity that I have
ever seen in my 15 years of networking, and it pays every single day
like clockwork.
For that reason, I'd love to help you get started earning daily income.
If you join me by becoming an active member of BitClub and
purchase at least one pool share, I will send you $100 via your
choice of Paypal, SolidTrustPay, or Bitcoin to make your membership
FREE!http://archive.aweber.com/secondsold/9W_5H/h/SecondsOld_com_OFFER_100_.htmWe know that MLM companies make hundreds of millions of dollars (mainly) throughout the world. One of the ways that has been developed to define whether a scheme is legally legit in the States is quite logical: does their income derive from business activity and is the referral scheme an adjunct to that legitimate activity, or is it the reason for the existence of the business in the first place?
Anyway, a bit of number crunching.
For BitClub (or any other investment) to be sustainable and not a Ponzi, it must earn more than it pays out, or it will have to use new incoming investments to pay earlier ones.
So, how much does BCN pay out, and how much does it have coming in?
Because everything is secret and these people tend to make stuff up to suit the situation, these will be called "fag packet" calculations, as in not claiming to be 100% accurate, but, like something jotted on the back of a cigarette packet, hopefully giving an oversight into the situation.
How many investors need paying, and how much?
According to Thomas Morrison on FaceBook, (he probably doesn't exist, but there are a number of other references to similar amounts), BitClub Network has
6000 Bitcoin Educators (sic) earning Bitcoin daily 
6000.
Ok, in order to qualify as an "educator", you have to be bought in. Let's assume they count everyone who has paid in, even non referral marks like our EndtheFed in that 6,000.
That's $99 each, plus between $500 minimum and $3500 for all three mining schemes.
Let's ignore the $99 (a handy $600,000 bit of change) and concentrate on the repayments to those 6,000 investors.
All these schemes have important sounding names for levels within them and BCN is no exception, with its "Founders".
A Founder, according to a tweet last november, buys all three of the mining programs for $3500 and 500 Founders had already been found, with another 500 being lined up.
http://patrickpretty.com/2014/11/18/bitclub-network-now-wants-500-new-suckers-participants-exhorted-to-be-patient-because-purported-mining-community-venture-is-like-building-a-home-made-space-ship-to-explore-outer-space/Let's say for the sake of our fag packet, that they found them.
Let's say, conservatively, that the 6,000 'educators' consist of 1,000 @ $3500 each and the other 5,000 at an average of $1000 each. That would be a good number of $1000's, plus quite a few more all-ins balancing out a few $500's.
With these sort of people, you would be hounded non stop to increase your basic investment (and your sponsor's affiliate earnings). Once you're in and you believe/have convinced yourself/been convinced, the only way is to max out.
That's about $9,000,000. A lot of money to you and me, but small beer in the world of MLM cons. And plenty enough to buy a farm and have big change.
But, in order for it to be legitimate, BCN have to service that debt from exterior i.e. mining profit, not from new investors or they will be a Ponzi..
How much do they need to find?
They have mandatory reinvestment % on the different account values. These % are NOT mining costs, despite BCN halfheartedly once trying to imply that, they are re-investments in extra shares created for the benefit of the investor. They can't be both, if they are sold as a share they cannot be used to pay the bills. Double counting is a MLM speciality.
Let's have a look at LERDBARON aka EndtheFed's account:
Ignore the cummulative totals, let's just look at "last 24 hours"... 0.00585
BTC earned on 1.2954 shares.
That's a basic unit of 0.0045
BTC per $500 share per day, but of course 50% minimum of that is mandatorily reinvested, so the actual cash out available to the lowest tier 'miner' is pretty much around their 1000 day implied ROI, or ~0.0022
BTC per day.
The re-investments are totally meaningless until they provide a tangible income, or have a resaleable value. IOU's backed by nothing.
For the sake of this, let's say that each group of 'miners' has stayed at default re-investment %'s, despite being urged to crank it up to the max and re-invest EVERYTHING.
Cash paid per day:
On 2000 x $500 accounts that's 9
BTC @ 50/50%, 4.5
BTC paid out.
On 4000 x $1000 - - 36
BTC @ 60/40% 21.6
BTC paid out.
On 2000 x $2000 - - 36
BTC @ 70/30% 25.2
BTC paid out.
A total of 51.2 BTC paid out daily, plus future liability of 28.8
BTC compounded re-investment, added daily. Hold that thought....
* * *
So, how much are they earning, then? As in mining income, they have no other source of revenue.
They were trumpeting about having over 2 PH/s and roaring up the mining leader board a while back. Since they have been advertizing their pool, they have recently been showing 4.2 PH/s on their mining stats here
https://bitclubpool.com/index.php?p=statsBut, of the 60 blocks mined since 07/29, 18 of them have been attributed to non BitClub mining interests happyorange and holyscott
which gives BCN about 1.5 blocks per day to themselves, or 37.5
BTC maximum.
That's a gross figure, without any deductions for capital investment, electricity, staff etc. etc. and certainly none for the estimated 30%+ cost of the huge referral system.
They claim to be mining in Iceland. There was an interesting video about Genesis Mining recently, where the CEO shed a bit of light on the cost of producing a Bitcoin in a modern farm in Iceland.
http://uk.businessinsider.com/photos-iceland-bitcoin-mine-genesis-mining-cloud-2015-8Streng says one Bitcoin costs them $60 in electricity, $130 in fixed costs and leaves about $50 profit for dividend payments to investors @ a price of $240/BTC. Any decrease in price comes straight out of that $50 profit, the other costs are fixed.
In other words, about 20% profit before dividend and tax.
Assuming Streng isn't lying, then the same maths apply to our BCN friends.
A gross revenue of 37.5
BTC per day becomes a nett distributable profit of 7.5
BTC per day after costs. Hold that one too....
* * *
Daily profit and Loss for BITCLUB NETWORK
LIABILTIESCash payments to investors 51.2
Future liabilities 28.8
Mining Overhead 30.0
INCOMEGross mining revenue 37.5
DAILY OPERATING CASH DEFICIT 43.7 BTC,
plus future unfunded liabilities increasing at 28.8 BTC per day.
Even if you said all of the re-investment went to paying the existing overheads and infrastructure costs and thus that future shares would be worthless, the conclusion is still inescapable
BY THEIR OWN FIGURES, BITCLUB NETWORK IS AN UNSUSTAINABLE PONZI OPERATION, USING BITCOIN MINING AS A FRONT FOR A MULTI LEVEL MARKETING SCAM.
Minor edit for grammar.
