I agree with the reduction in expected value, and on its effect in reducing investment in risky-but-lucrative industries, but I think even as a simplified calcu

I agree with the reduction in expected value, and on its effect in reducing investment in risky-but-lucrative industries, but I think even as a simplified calculation you should consider the tax deduction from the capital loss which can usually be carried over several years. If I have (say) a 5 year period to carry forward capital losses and that over that time I can open several mines (as you suggest), then the tax is essentially applied to the average profit as opposed to the peak profit. I suspect this tax-efficiency of scale is a significant reason for why you end up with huge corporations in such industries (oil and gas, minerals). Opening a single "mine", the failure of which results in bankruptcy and no future profits from which to deduct losses, is essentially taxed out of viability in an expected-value sense, whereas a large portfolio in an enduring profitable company is profitable in an expected sense.