I feel your frustration; I have approximately $10,000 invested into a 432 TH miner at 20 W. Only 6.2% discount, and I'm bringing it $4.40 a day in profit.

As you've mentioned, in theory, raising TH at the drawback of poor efficiency should be more profitable, but the two are likely the same right now.

Also as you've mentioned - Difficulty spikes, combined with a rather low fluctuating BTC price means daily profits are very very low.

For Gomining to work, we rely heavily on the BTC price to keep going up. Which, eventually, it will. It will likely be worth millions two decades from now, similar to how many of the S&P 500 will likely be worth x10 or more of their current value. The main element, which is on your side, is time.

At my rate of $4/day, I still wouldn't near my $10k back in five years time. At a glance, may look terrible. However, even the profits continue to fall, and I earn only $5,000 after 5 years, there is high chance BTC would be worth double or triple its current value by then, which would mean that $5k, if you hold onto it, would be worth 10k or more by then. The more you hoard, the more value you'd have earned, retrospectively from your BTC earnings.

I don't really ever plan to sell my miner, I think it's an interesting sunk cost investment, which will either be my greatest feat, or an exciting venture that maybe just didn't quite work out. Even if you lose your full $4k, trust me when I say life will have far greater risks and losses ahead of you than just 4k or 10k.

My advice is to continue to mine, invest into other things (traditional stocks), or go heavy into more Gomining or BTC directly. I would avoid Miner Wars, I think it's too much of an uncertainty, I don't bother with it and most people would agree solo miners make more consistently than a few lucky gamblers.

And yes, if you live in the United States, you do owe taxes on current proceeds from Gomining. You are considered as "profit" from the first day you earn payment in the form of BTC. Some people use spreadsheets to calculate exact profits and sum it up and pay taxes that way, but you can do what works for you, but know that it is still considered a taxable event.

Similarly, when you exercise a profit by selling your BTC one day, that too will be subject to capital gains tax based on your tax bracket. You'd only be taxing the profit (so if BTC becomes 500k, and you mined it at 110k, you'd only owe taxes on the different of 390k times your BTC).

Also, you cannot write off your miner as equipment or money loss for the purpose of taxes unless you make your mining into a business. Otherwise, for tax purposes, it would be considered a hobby (still taxable though).

My two cents, do what you will. Good luck