Hello and excellent question.  You definitley keyed in to the main points.  Hobby versus business.  If it meets the business qualifications the Schedule C will be the correct way to report.  If it meets the hobby criteria then report as other income..  The related expenses will not be deductible.  I am going to include a link below that we have on our TurboTax support site that was updated as recently as June 14, 2023. 

TurboTax "Your Crypto Tax Guide"   

Hello @lnk-fr,

Staking rewards are generally considered income, and depending on the circumstances, they may be subject to self-employment tax. Here are some factors that make staking rewards subject to self-employment tax:

• Frequency and Regularity: if you engage in staking activities frequently, it may be viewed as an ongoing income-generating effort like running a business.
• Operational Effort: If you actively participate in the network’s operations, such as verifying transactions, maintaining nodes, or actively managing the staking process, it can be seen as a business activity.
• Participation in Network Governance: If your staking activities involve voting or participating in network governance decisions, the IRS may view this as active participation in the operation of a block chain network, potentially leading to self-employment tax implications.
• Structuring of Rewards: If the reward is distributed as regular income for your involvement in network activities, they are more likely to be subject to self-employment tax. If they are structured as passive investment income, they may not be.
• Type of Cryptocurrency: The specific cryptocurrency being staked can influence the tax treatment. Some have established taxation guidelines, while others may be subject to evolving interpretations by tax authorities.

Regardless of whether your cryptocurrency income is subject to self-employment tax, it is crucial to maintain accurate records and fulfill your tax obligations.

After speaking with a tax accountants, this article is not 100% accurate. 
The IRS hasn't made it clear yet on whether POS staking and staking income in general is to be treated the same as POW mining/Bitcoin mining. POW mining requires physical space, equipment, etc to run it at scale and more likely to be a business, but with Pos staking, delegated staking and defi staking in general, all you do is a few clicks from your computer and could barely be considered a business or work in the traditional sense. It's more similar to collecting interest than anything. Unless you are in the business of offering running Validators or Staking as a Service, it shouldn't state that all forms of staking Definitively is Business Income. 
The advise I've been getting is to report is as misc income until the IRS gives clear guidance on this issue.  Your thoughts?

Hi  @lnk-fr, 

The above article does not state that all forms of staking definitively is business income, rather, it provides circumstances in which they may be subject to self-employment tax for you to consider. If none of the above factors apply, then the correct way to enter staking income is to report as miscellaneous income on your 1040. 

I am including the most recent IRS guidance on this subject for your convenience: 

Taxpayers should continue to report all cryptocurrency, digital asset income

Thanks! Caroline B