You seem to be assuming that we live in the real world. If our physics is just a part of someone's simulation, there is no particular reason why it would be a typical representation of the way things work for most people in the multiverse.

Let me give an example. I can write a novel, and some of the characters in the novel can also write novels. Even more, I can write a novel containing the sentence, "Michael wrote a novel containing an indefinite series of authors writing novels containing authors." In other words, the "physics" of being a character in a novel does not require limited resources, and does not imply any limitation in the series of simulations.

When people have these kinds of discussions, I regularly see the assumption that even if there are lower level worlds that work in some other way, the top level has to operate with our physics. In other words the assumption is that we are in the real world. If we are not, the top level might be quite different. The top level might even be a fundamental, omnipotent mind (you may suppose this is impossible but that may just be the limitation of your simulated physics) who can create a world by thought alone.