The current scenario negatively outweighed the most pessimistic forecast
And it keeps getting worse…
What OP describes is called a rationality trap and more specific a case of the paradox of competition. We have that in the “real” world to, for example when competition does not increase productivity but marketing costs. It’s a disease all cryptos using a “proof of $Some_Resource_With_Economic_Value” scheme to mitigate Sybil attacks have. It’s not specific to Chia, BTC and everyone else has this too and basically it’s the main reason, why crypto might be a stupid idea in the long term: There is currently no economic incentive to implement an alternative solution to the Sybil problem, because people can still benefit massively from PoSRWEV.