Mining Automatic: $22M Raised, 13% Spent on Mining

In October 2024 a US Army servicemember clicked on a social media advert and sent $25,000 to a company called Mining Automatic. His contract guaranteed him at least 3% a month, $750, for five years. Four months later his first payment arrived: about $63 in bitcoin. When he asked why, staff told him it was a "complementary payout" while the company moved to newer machines. By spring he was told the company was being wound up and he would be repaid with extra. He never received another cent.

He was one of more than 380 investors who, according to the Securities and Exchange Commission (SEC), gave about $22 million to Zan Shaikh, a 28-year-old from Miami, and his company, Bright Vision Distribution LLC of Marlborough, Massachusetts, trading as Mining Automatic, between June 2023 and May 2025. On 20 July 2026 the SEC sued both in federal court in Boston. Its arithmetic is the whole case: only about 13% of the money, roughly $2.9 million, was spent on mining. The mining earned about $1.1 million. Investors were paid about $1.8 million. At least $20 million of their original stakes has never been returned.

What crypto mining is, and why it cannot pay a fixed 3%

Bitcoin and similar coins have no bank keeping the books. Instead, thousands of specialised computers around the world compete to add the next page of transactions to a shared public ledger. Each machine makes trillions of guesses a second at a numerical puzzle; the first to hit the answer gets to write the page and is paid in newly created coins plus the fees on that page. That race is "mining". Think of it as a lottery where the prize goes to whoever does the bookkeeping, and every guess is a ticket.

"Hash rate" is the number of guesses a machine, or a whole operation, makes per second. More hash rate means more tickets and a bigger share of the prizes. But the network also adjusts a setting called "difficulty": as more machines join, the puzzle automatically gets harder, so the same machine wins less each month. Add the swinging price of bitcoin, the electricity bill and machines that wear out, and mining income is about as steady as a farmer's harvest. An honest operator can say how much hash rate it runs. It cannot promise a fixed monthly return any more than a gold miner can promise a fixed dividend while the gold price moves.

The pitch: a "hands off" income

Mining Automatic promised exactly that. Its adverts, mostly on social media, said investors would "just sit back" while funds were "mined and sent to your account", with "a minimum of 3% monthly returns with the potential to earn up to 10%+". Three percent a month is more than 40% a year. The contracts said the company would install mining equipment for each investor, keep 20% of the profits and pay the investor 80%, monthly, for five years. Nearly all of them also guaranteed that anyone who had not earned back their full stake after five years would be made whole. Some promised a precise amount of computing power, such as 110,000 megahashes per second for $100,000.

The website claimed "annual returns" of 51.5% in 2021, 46.2% in 2022 and 51.8% in 2023, and a team with "over 30 cumulative years of experience". The SEC says Mining Automatic did not exist in 2021 or 2022, and that neither Shaikh nor many of his staff had any mining experience. His earlier businesses, also run through Bright Vision, included a course on building Amazon storefronts and a YouTube advertising business. About 100 of the investors, who had put roughly $7 million into one of those earlier, abandoned ventures, were talked into "rolling over" their money into Mining Automatic.

Shaikh had a sizeable social media following. In a March 2023 video he told followers that pouring every penny into a "marketing machine" was an "infinite money glitch", and that the real problem would become "how the hell do I deliver on this?" The SEC quoted that line in its complaint, noting that Mining Automatic "had precisely this issue."

Where the $22 million went

The single biggest expense of the mining company was not mining. About $7 million, nearly a third of everything raised, went on marketing and advertising to bring in more investors. Around $2.9 million went to an outside firm for machines, power and hosting, and investors' money was pooled into bulk purchases rather than assigned machine by machine. About $500,000 went into Shaikh's unrelated businesses. The complaint lists personal spending including $375,575 on real estate, $151,750 at a car dealership, $76,547 on entertainment and $118,585 in cash, plus $778,550 transferred to Shaikh's own bank accounts.

Payouts had nothing to do with any investor's machines. A former employee told the SEC that investors were sorted into "cohorts" by what their contracts promised, 4% a month for one group and 3% for another, and that Shaikh decided who got paid, often favouring those who complained loudest. Because the $1.8 million paid out was more than the $1.1 million the mining produced, part of every "return" was other investors' money. That is the defining feature of a Ponzi scheme, the fraud named after Charles Ponzi, who paid early investors with later investors' cash in 1920s Boston.

The outside firm stopped mining for Mining Automatic in February 2025, and payments to investors stopped by March. In April 2025 Shaikh sent investors a video saying the company was being "acquired" by "one of the much bigger players in the space" and that they would be made whole. The SEC says no buyer existed. At the same time he began pitching them a new "automated trading system".

The settlement, and what investors can expect

Shaikh and Mining Automatic did not fight the case. They agreed, without admitting or denying the allegations, to court orders banning them from future securities fraud and barring Shaikh from running a public company, a so-called partial settlement. The part that matters to investors, how much he must hand back (disgorgement) and what fine he pays, was left for the judge to decide later on an SEC motion. As of mid-October 2026 no amount has been set and no repayment plan announced.

The FBI's Boston field office is separately asking victims of Shaikh, Bright Vision Distribution, Mining Automatic, YT Automatic and a related venture called Replic8 to come forward, saying investors were targeted from 2022 to 2025. No criminal charges have been announced.

Mining Automatic is a small entry in a long list. BitClub Network's organisers were charged by US prosecutors in 2019 over a $722 million scheme sold as bitcoin mining. The size changes. The structure does not: a guaranteed return from a business that cannot guarantee anything, a small slice of the money spent on the business itself, and payouts kept going with new deposits until the deposits stop.