Those possibilities only apply if it is possible to perform that kind of simulation in a finite period of time - I’m not suggesting it isn’t possible, simply that we don’t know if it is.

Using our historical rate of computational progression as the benchmark to suppose this isn’t the best idea either considering Moore’s law has been on the decline for years now as our primary method of improvement (making smaller transistors) has run head first into physical and quantum mechanical issues.

Either way, I find the idea of the existence of extraterrestrials a much more concrete hypothesis given we know for a fact that life can exist on a planet with sufficient conditions because we are life existing on a planet with sufficient conditions.
Even if the odds are tiny, miniscule we know there are at least odds to be had, because otherwise we wouldn’t exist - something we don’t know for sure is true in the case of the simulation hypothesis. As such I believe it to be a leap in logic to compare the two.