Bitcoin and other cryptocurrencies surged to record highs over the past year, igniting fierce debates about their status as viable investments. That rally also lifted many stocks which were related to cryptocurrencies or underlying technologies like GPUs and blockchain.

There are conservative ways to play that rally, including GPU market leaders NVIDIA and AMD and blockchain leader IBM. But there are also dangerous stocks that are surging on the bitcoin hype without any fundamental support.

Here are two stocks that fit that bill: Riot Blockchain (NASDAQ: RIOT) and Xunlei Limited (NASDAQ: XNET).

Image source: Getty Images.

Riot Blockchain

Back in October, the failed medical device maker Bioptix renamed itself Riot Blockchain and abruptly pivoted toward the blockchain and cryptocurrency market. Shortly afterwards, it made a minor investment in a small Canadian cryptocurrency exchange called Coinsquare.

In November, Riot purchased Kairos Global Technology, a two-week-old crypto-mining firm that only had $1.9 million in assets (mainly 1,200 mining rigs) for $12 million. This was a bizarre move, since Riot could have bought the same hardware directly from its manufacturer, Bitmain, for about $2.1 million. Riot paid for the acquisition with $12 million in newly issued preferred shares.

After Bioptix's transformation into Riot Blockchain, the stock rallied nearly 300% and its market cap approached $300 million. Yet the company doesn't generate any real revenue yet -- it finished last quarter with just $24,175 in "other" revenue (flat from a year earlier) via an animal health licensing agreement from Bioptix. Its net loss widened from $1.7 million to $5.3 million during that period.

All these developments indicate that Riot is simply trying to cash in on the bitcoin hype without a real long-term plan. Its rising stock price will enable Bioptix's earlier investors to cash out, but it will likely burn any investor who thinks that its current rally is sustainable. Yet Riot still raised $37 million in a recent PIPE (private investment in public equity offering) from investors looking for a piece of anything related to cryptocurrencies.

That's why famed short seller Citron Research recently disclosed its short position in Riot, calling its rally "full mania" and accusing it of "making fraudulent claims to investors."

Xunlei

Unlike Riot, Chinese tech company Xunlei actually runs a business with consistent revenue growth. Its core platform, the Xunlei Accelerator, boosts the speed of online transmissions for streaming videos, online games, and other cloud-based content. It also generates revenue from online ads and other internet value-added services.