You're not wrong exactly, but if the crappy cheater AI treats collapsing the system to degeneracy as a valid optimal solution to its prediction task, maybe we'd deserve to be wiped out for releasing it with apocalyptic-level powers and such an inferior objective.

Fortunately there's a really simple solution to offer it, in just wiring measurement to "prediction" directly (perfect correspondence, and much lower effort than annihilating Life and removing the atmosphere). And I don't particularly believe a system like that can be a general problem solver, much less one that climbs to World-jeopardizing influence on its own.