Operating Loss

See https://www.irs.gov/newsroom/know-the-difference-between-a-hobby-and-a-business

and

https://www.irs.gov/pub/irs-news/fs-08-23.pdf

An activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).

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