[swid]

If you had infinite compute and time could you not just simulate all of “earth” itself? I think the compute needed for that would be absurd and unreasonable to build, but such a simulation would obviously have natural selection going on inside of it.

If that is possible; then perhaps there are many simplified simulations that can still be large and fast enough to support evolution. Or we can leverage actual reality as well, to give digital life embodied experiences in the real world.

Thinking the simulation needs to spread is the wrong way to think about it. The universe does not need to multiply into more universes. If I replace simulation with universe in your final paragraph, the argument makes little sense to me. There can be competition within a simulation, and consciousness seems useful where competition and survival are somehow part of that.