The Argo Blockchain (LSE: ARB) share price is up by more than 25% as I write. It’s a big one-day gain for the cryptocurrency miner, whose shares have already risen by more than 2,500% over the last year.

Argo recently revealed plans to build a new crypto mining facility in West Texas. News of Tesla’s $1.5bn Bitcoin buy has also boosted interest in this sector. I’ve been taking a fresh look at Argo Blockchain — should I buy into this exciting story or have I missed the boat?

Crypto could be about to get bigger

I reckon there are two factors that are likely to influence Argo Blockchain’s growth potential. The first is the cryptocurrency market itself. Will Bitcoin and its rivals become mainstream investment assets with long-term value?

I think it’s too soon to be sure, but Tesla’s $1.5bn purchase won’t do any harm to this cause. More seriously, payment firms including PayPal and Mastercard are preparing to handle Bitcoin payments.

Until now, it’s been pretty difficult to actually spend Bitcoin. But this could change if big payment firms start allowing customers to pay with crypto. I see this as good news for Argo Blockchain’s growth prospects. In my view, the crypto market could get bigger over the next couple of years.

Can ARB continue to deliver?

The second risk that could limit Argo Blockchain’s growth (and its share price) is if the company itself runs into problems. Operational mistakes or financing issues could cause the value of the stock to fall.

In fairness, I don’t see much evidence of this yet. The company seems to have been adding new mining capacity successfully, with good cash generation. The group’s latest update shows mining revenue of £2.5m in January, up from £1.6m in December.

However, the planned new-build mining facility in Texas could be a tougher test. Argo has secured a $100m debt facility to fund this project. But if costs overshoot or the Bitcoin price crashes as it has done before, I think this debt could quickly become a burden for the company, limiting shareholder returns.

Can Argo Blockchain’s share price keep rising?

When I buy a share, I like to understand the valuation. I have to admit that I’m struggling a little bit with Argo Blockchain’s £640m market cap.

At the end of January, the company said it was holding 501 Bitcoin and equivalents. I estimate they could be worth about £19m today.

In addition to this, brokers covering the stock are forecasting earnings of about 2p per share at Argo in 2021. I’d be willing to apply a growth multiple of perhaps 25 times earnings to this, but that would still only value the shares at 50p, equivalent to a market cap of about £180m.

In short, my feeling is that the Argo Blockchain share price has probably run ahead of events. I’m not comfortable buying this stock at current levels, so I’ll be staying away for now.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.