Elon Musk's argument is based on flawed logic. I am seeing, with increasing frequency, the argument that 'it is possible, therefore it is certain', this is clearly not the case.

"If it disagrees with experiment, it's wrong." Richard Feynman.

Simulation hypothesis strikes me as a rather entertaining variant of creationism, the 'evil demon' thought experiment, or Plato's 'ideal realm and the demiurge'.

As far as it goes for entertainment, here is one of my favorites,
https://steemit.com/simulation-hypothesis/@dan-atstarlite/the-simulation-hypothesis-dna-is-a-blockchain-you-re-an-account-your-consciousness-holds-the-private-key