Based on this assumption Godel proved that there are things that algorithms cannot compute.
Since this is /. I won't apologise for pedantry. Gödel proved that in any sufficiently complicated axiom scheme there are theorems which cannot be proven. The incompleteness theorem isn't really about algorithms, although the proof technique of diagonalisation was borrowed by Turing for the proof of the halting theorem. Church restricted the term algorithm to what can be computed with a Turing machine, but modern computability theory makes heavy use of oracles, so it's important to be clear about the computational model. The paper under discussion probably rules out simulation in a context without oracles, but if we're speculating about the existence of a superuniverse in which this one is being simulated then "It cannot have an oracle because I can't imagine, based on the physics of this universe, how one could exist" seems to be presupposing the conclusion.