Argo Blockchain (LSE: ARGO) is one of the hottest stocks on the London Stock Exchange right now. Yesterday, it was up nearly 30%. Over the last 12 months, it has gained a staggering 3,600%.

Here, I’m going to look at why Argo Blockchain’s share price is skyrocketing right now. I’m also going to discuss whether I’d buy the stock for my growth portfolio today.

Argo Blockchain’s share price is on fire

There are a few reasons Argo Blockchain’s share price has surged recently.

The first is that the price of Bitcoin has continued to rise. As a large-scale miner of cryptocurrencies, Argo is essentially a leveraged play on the price of Bitcoin in the same way that gold miners are leveraged plays on the price of gold.

A month ago, Bitcoin was trading at around $36,000. Yesterday, however, it hit $50,000. This rise in the price of BTC has boosted Argo’s share price significantly.

The second reason Argo Blockchain stock has jumped is that a number of major companies have embraced cryptocurrencies recently. Last week, payments giant Mastercard announced that it plans to facilitate crypto payments in the near future. Meanwhile, Tesla announced that it bought $1.5bn worth of BTC and said that it plans to accept the cryptocurrency as payment in the future.

Finally, recent trading updates from Argo have been encouraging. On 29 January, for example, the company advised that it had just brought 1,295 new mining machines into production. More recently, on 10 February, it advised that it plans to acquire 320 acres of land in West Texas and build a new 200mw mining facility in the next 12 months.

Big Bitcoin logo.

ARB shares: should I buy?

While Argo Blockchain appears to be growing rapidly, there are a few issues that concern me about the shares.

The first is the fact that it’s hard to calculate a fair value for the stock. Argo’s revenue ultimately depends on the price of Bitcoin. And this is notoriously hard to predict. So, like an oil or gold miner, its revenue growth is really out of its hands.

The second is the fact that the stock is so leveraged to the price of Bitcoin. Obviously, this is a great feature when the Bitcoin price is rising. However, it’s not so good when the price of Bitcoin is falling. When BTC fell around 25% in January, for example, Argo Blockchain’s share price roughly halved.

Finally, the current market cap of £856m looks too high, in my view. If we take January’s mining revenue of £2.48m and multiply that by 12 to get a revenue forecast for the year, the annual forecast is £29.76m. That puts the stock on a forward-looking price-to-sales (P/S) ratio of about 29. That’s nearly twice as expensive as Tesla, which is generally regarded as a very expensive stock. It’s also worth pointing out that the current market cap equates to a valuation of £1.7m per Bitcoin held at the end of January.

Weighing everything up, I don’t see Argo Blockchain as a great fit for my portfolio. There’s too much uncertainty for my liking in terms of revenue projections and it’s hard to know how much this stock is really worth.

All things considered, I think there are safer growth stocks for me to buy right now.

Edward Sheldon owns shares in Mastercard and has no position in Bitcoin. The Motley Fool UK owns shares of and has recommended Mastercard and 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.