The hosting cost side I can understand, though they received quite some funding recently, but I assume it's not going towards actually running the site, but to who knows what broader impacts and so on.
Moderation for Arxiv is a silly idea. It already shouldn't be taken as a quality signal that something is able to be up on Arxiv. Obviously they should remove illegal stuff, but beyond that, requiring moderation is a misunderstanding of their role and reason for popularity.
If hosting is too expensive, I guess an alternative aggregator could also arise. With just metadata and a hash of the pdf that can be hosted anywhere, and as the sumbitter, if you move the file, you can change the URL.
The main reason for Arxiv's existence is the timestamping and the easy referencing. (Though I admit that the stable hosting is also a pretty important part, but they mention moderation effort as the reason, not the hosting costs.)
Academia is losing sight of the forest for the trees, can't see more than an arm's length ahead of their noses.