Alternative to Stream_Copy_To_Stream() php

I am working on a file sharing site right now and I've run into a small problem. I am using the upload scrip uploadify which works perfectly but if the user wants i want the uploaded file to be encrypted. Now i have working code that does this as shown below but my server only has 1GB or memory and using stream_copy_to_stream seems to take up the size of the actually file in memory and my max upload size is 256 so i know for a fact that something bad is going to happen when the site goes live and multiple people upload large files at once. Based on my code below is there any alternative that barely uses and memory or none at all, I wouldnt even care if it takes longer i just need this to work. I have the download version of this working because i have the file directly decrypted and immediately passed through to the browser so it decrypts as it downloads which i though was pretty efficient but this upload problem doesn't look to good. Any help is appreciated.

$temp_file = $_FILES['Filedata']['tmp_name'];
    $ext = pathinfo($_FILES['Filedata']['name'], PATHINFO_EXTENSION);
    $new_file_name = md5(uniqid(rand(), true));
    $target_file = rtrim(enc_target_path, '/') . '/' . $new_file_name . '.enc.' . $ext;

    $iv_size = mcrypt_get_iv_size(MCRYPT_RIJNDAEL_128, MCRYPT_MODE_CBC);
    $iv = mcrypt_create_iv($iv_size, MCRYPT_RAND);
    $key = substr(md5('some_salt' . $password, true) . md5($password . 'more_salt', true), 0, 24);
    $opts = array('iv' => $iv, 'key' => $key);

    $my_file = fopen($temp_file, 'rb');

    $encrypted_file_name = $target_file;
    $encrypted_file = fopen($encrypted_file_name, 'wb');

    stream_filter_append($encrypted_file, 'mcrypt.rijndael_128', STREAM_FILTER_WRITE, $opts);
    stream_copy_to_stream($my_file, $encrypted_file);

    fclose($encrypted_file);
    fclose($my_file);
    unlink($temp_file);

temp_file is the first instance that i can see of the uploaded file