If we are in a simulation, there's no reason for it to be an entire universe. You don't need to render the entire game at once, just the tiny sections the players are viewing.
Edit: Perhaps it's adaptive and only simulates what will be observed. And if some cost saving optimization artifacts are discovered within the sim, it can be fixed and reverted to a earlier state.
Edit2: Perhaps it only has to simulate from your perspective, but the more you critically observe and interact, the more expensive the simulation is.
New life goal: be as difficult to simulate as possible ;-)