Late 2012 iMac - Thunderbolt : no hardware was found
Hardware not found
When it comes to hardware, there are two “conditions”

Detected
Functional

Hardware can be detected and non-functional, but it is impossible for it to be functional without  being detected.
When something is detected, the system says “I found this piece of hardware.  It’s identified by these numbers at such-and-such and address.”  That’s a very simplistic description of what happens but it encapsulates the concept.
Hardware is functional when a driver(kext) is loaded and the device can be used by the system to do whatever it’s designed to do (i.e. webcam displays pictures and captures sound)
Your Thunderbolt subsystem has failed
Now, if a previously functional device suddenly is no longer detected, the device has failed.  It could be the Thunderbolt controller or the associated circuitry, but in the end, it has failed to the point where the system doesn’t see it.

I’m almost positive that it's a firmware issue as per the system does not see any thunderbolt firmware.

Unlikely. Even if the firmware was corrupted, your system would  report an “unknown device” because something would be there, it just can’t identify what it is.  Upgrading/downgrading firmware is not going to work if it can’t find the device which to apply the update.
Diagnostics
The very first thing that should be invoked long before you reinstall the or do any sort of firmware patching is to run Apple Hardware Test (Hold D while booting).  An OS reinstall should be done last.  In fact, you should install macOS onto an external drive and boot off of that instead of wiping the drive.  Why? If there is any sort of forensic evidence of the failure, it gets erased with the new install.
Resetting the NVRAM and SMC are usually fruitless because they’re unrelated, but it can’t harm anything.  Before wiping the hard drive and reinstalling the OS, try Safe Mode or Recovery Mode.  These are clean, versions of macOS (Recovery, especially) that have only the native drivers.  If the hardware device can’t be seen here, it’s definitely a hardware failure.
Bottom line
It’s got to go in for service or you need to replace the unit.