Of course mining isn't dead. It's indeed absurd that people claim this. For the network itself it doesn't matter at all what the hash rate is. When people say that mining is dead, most intend to say that mining for profit is futile for the regular person doing it in his basement. Which is mostly true. The margins are getting smaller and smaller and only the very big operations survive.
Still, if this makes a lot of mining unprofitable and the hash rate indeed goes down, it effectively becomes profitable gain. It's self-regulating - beautiful!