What happened

Shares of Eastman Kodak (KODK -1.39%)Riot Blockchain (RIOT 0.60%), and Xunlei (XNET 3.25%) have plunged more than 10% as of 9:45 a.m. EST as the market's largest cryptocurrencies fall in value. All but one of the 10 largest digital currencies are down more than 10% in the last 24 hours, with the biggest of them (bitcoin) falling 14%, according to CoinMarketCap.

So what

Kodak is one of the latest stocks to find new life as a cryptocurrency company. The photography and film company announced it was getting into digital currencies in a big way, creating its own platform for photographers to sell content. The planned platform, which it calls KODAKOne, will use its own cryptocurrency (KODAKCoin) for the sale and purchase of digital content.

Separately, Kodak also has its eye on the bitcoin mining business. The company announced a program wherein investors pony up the $3,400 purchase price of its Kodak KashMiner in exchange for half the bitcoin it mines over a 24-month period. Kodak believes it can power the machines at a lower cost than other bitcoin mining outfits, given the fact it has a power plant on-site at its Rochester, New York, headquarters. Those familiar with the bitcoin mining business are skeptical of the KashMiner's reported economics, given that Kodak's projections call for investors to generate a $5,600 profit on a $3,400 investment in just two years' time. If the returns were so good, one wonders why Kodak would share the opportunity with investors. 

Riot Blockchain is no stranger to bitcoin-related volatility. Formerly known as Bioptix, it changed its name and its business model in October 2017, becoming a holding company for investments in companies that make their money selling the "picks and shovels" to the digital currency gold rush. In its previous incarnation, the company spent years generating losses in its biotech business lines.

Bitcoin token design in front of a candlestick chart.

Image source: Getty Images.

Riot's premier investments include a bitcoin mining operation and a stake in Coinsquare, one of Canada's largest cryptocurrency exchanges. While its mining operation is certainly less profitable when bitcoin declines in price, it's fair to say that volatility in bitcoin is good for its stake in Coinsquare. When bitcoin prices move quickly in either direction, trading volume rises, generating more transaction fees for the companies that act as market makers in digital currency markets. 

Finally, we have Xunlei, a cloud technology company that pursued cryptocurrency as something of an afterthought, disclosing in a Nov. 20, 2017 earnings release that it would begin "exploring emerging blockchain technology," sending its shares to an all-time high. 

Last week at the Consumer Electronics Show (CES), Xunlei showed off its OneThing Cloud product, which was described as "a smart device that can collect idle computing resources including bandwidth and storage from users who will in turn be rewarded with a form of digital asset called LinkToken." In effect, OneThing Cloud enables its users to offer up their computers' processing power and excess storage and collect rewards in the form of LinkToken, a digital coin of dubious and unknown value.

Now what

Kodak, Riot, and Xunlei all have one thing in common: A pivot into cryptocurrencies as a likely way to distract from their money-losing legacy businesses. Each of these companies surged on news they were getting involved in blockchain, so it is no surprise to see shares plummet, as digital currencies are broadly declining today.

Their share-price performances today are amusing, if only because none of these three companies generate any meaningful revenue or profit from bitcoin and other cryptocurrencies relative to their market capitalizations on a current basis, yet all of them are plummeting as if digital currencies are a needle-moving development for them.

As the tides go out in the cryptocurrency markets, companies that have enjoyed a crypto-related boom in their share prices are now seeing a pullback.