I'm not claiming panpsychism. I'm saying that when you run a rough simulation of something known to have an emergent internal property - ie, the human brain and consciousness - it's not completely outlandish to suggest that the emergent property might arise in the simulation as well. It's nothing to do with sand, it is the nature of the software being run, be it "on the metal" like us, or somewhat abstracted, like the LLMs.
I don't think this quite reasonable proposition leads to the end of humanity or has anything to do with ethics, and nothing you've said really refutes it (and I am always grateful to be shown how I am wrong).