Bitcoin (BTC 0.35%), the world's top cryptocurrency, lost nearly 40% of its value over the past three months. China's crackdown on cryptocurrency trades, Tesla's suspension of Bitcoin payments, and the rise of smaller cryptocurrencies all contributed to that sell-off.

Bitcoin's decline also dragged down shares of companies that depend on its growth. Let's examine three such stocks -- Marathon Digital (MARA -1.02%), Riot Blockchain (RIOT 0.60%), and Coinbase (COIN 4.23%) -- and see why they're still risky investments.

1. Marathon Digital

Prior to the Bitcoin boom, Marathon was a patent-holding company. Its main strategy was to purchase patents from other companies, then generate revenue through licensing agreements or litigation.

An illustration of Bitcoin logos scattered across a blockchain.

Image source: Getty Images.

Up until last year, Marathon was a penny stock. But over the past 12 months, its stock skyrocketed nearly 3,500% for two simple reasons: It ordered 70,000 high-end ASIC Antminers from Bitmain last December, which will triple its existing fleet of miners, and bought $150 million in Bitcoin this January. It also rebranded itself as a "pure play" on Bitcoin.

As a result, Marathon now has a market cap of $3.2 billion, despite only generating $4.4 million in revenue with a net loss of $10.4 million last year. All of its revenue came from mining cryptocurrencies.

The three analysts who cover Marathon believe its revenue will rise 46 times to $201 million this year, with a net profit. That explosive growth could be driven by its expanding fleet of miners and rising Bitcoin prices.

However, investors should be skeptical of those estimates, since Marathon only generated $9.2 million in revenue in the first quarter of 2021. That quarter ended on March 31, prior to Bitcoin's big decline, so it could generate much lower revenue in the second quarter. That's why Marathon's stock price declined nearly 20% over the past three months -- and could tumble even further if Bitcoin's price doesn't stabilize.

2. Riot Blockchain

In late 2017, the failed medical device maker Bioptix renamed itself Riot Blockchain and declared it would transform into a major cryptocurrency company. It subsequently acquired the mining start-up Kairos Global Technology and its fleet of ASIC Antminers. 

Like Marathon, Riot's abrupt transformation into a Bitcoin bet set its penny stock on fire. The stock rose from about $5 a share before its rebranding to nearly $80 this February, but then it plunged back to the $30s as Bitcoin's price declined.

However, Riot still has a market cap $3.6 billion -- which is arguably an absurd valuation for a company that generated just $12.1 million in revenue with a net loss of $12.7 million last year.

The three analysts who cover Riot claim its revenue will soar 15 times to $179 million this year as it turns profitable. Those estimates are based on a belief that Riot's fleet of nearly 24,000 Antminers (following its recent acquisition of Whinstone) will pump out more Bitcoin as Bitcoin's price rises. The company also plans to more than triple its number of Antminers by the end of 2022. 

Unfortunately, Riot looks just as speculative as Marathon. Both companies abruptly rebranded themselves to capitalize on the Bitcoin craze, but neither company has a viable backup plan if Bitcoin's price continues to fall.

3. Coinbase

Coinbase, the world's largest cryptocurrency exchange, went public via a direct listing in April. The stock was set with a reference price of $250 a share and opened at $381 on the first day, but now trades just above $250.

Coinbase generates most of its revenue from transaction fees. Its revenue soared 144% to $1.3 billion in 2020, and it posted a net profit of $322 million, compared to a loss of $30 million in 2019. Those growth rates put it on firmer ground than Marathon and Riot, and the stock doesn't seem terribly expensive at 11 times this year's sales.

However, Coinbase's price-to-sales ratio is based on the expectation that its revenue will rise 382% to $6.27 billion this year. Coinbase started out the year strong, with its total revenue rising more than nine times year over year to $1.8 billion in the first quarter of 2021.

However, two things are keeping investors away from Coinbase. First, it's unclear where Bitcoin's price will head throughout the rest of 2021. Second, it faces tough competition from Square, Robinhood, and PayPal Holdings in the cryptocurrency trading market.

Coinbase might fare better than Marathon and Riot if Bitcoin's price keeps falling -- since it also offers other cryptocurrencies -- but it's still a risky all-in bet on the volatile cryptocurrency market. I'd personally prefer to invest in diversified fintech companies like Square or PayPal, which offer some exposure to cryptocurrencies, instead of a dedicated cryptocurrency exchange like Coinbase.