The amount of value extracted by the person mining reduces as more compute power starts mining, but that's actually a negative feedback loop that will reduce the total spending on chips for crypto mining.
The amount of security provided to the network is constant in the number of GPUs. As you add more GPUs, the network gets harder to attack. Does the network need as much security as it's paying for? Nobody is really sure, it's an open debate in the crypto industry.
I really don't see how the current hashrate is required to prevent a 51% attack, that seems way beyond what is necessary.
These Proof of Waste systems aren't really a negative feedback loop, ultimately asset prices determine mining yield. Capacity will keep being added to the network until the difficulty rises such that you are required to destroy $99.99 of resources for $100 of crypto. Until that point it's worth buying more hardware and energy as you get a positive expected return.
The amount of security provided to the network is constant in the number of GPUs. As you add more GPUs, the network gets harder to attack. Does the network need as much security as it's paying for? Nobody is really sure, it's an open debate in the crypto industry.