A key consideration for the IRS is: Is the activity profitable in some years? Also. could the activity become profitable even though it is a highly speculative venture.
If the activity appears to be for personal enjoyment and not to make a profit, the IRS can challenge the claiming of losses.
The IRS gives guidance on the difference between a business and a hobby here:
https://www.irs.gov/newsroom/know-the-difference-between-a-hobby-and-a-business
