A persistent idea in cosmology is that the universe originated and then continued to evolve as a black hole. While the notion of a black hole universe has generally been framed within the standard cosmological model, the latter has had numerous problems related to dark matter, dark energy and other issues. To avoid such problems an alternative is proposed which omits cosmic expansion, dark matter and dark energy. The observable universe is cast instead as primarily a thin spherical shell of cold (~29 K) baryonic matter situated near the Hubble radius. This shell of plasma holds 95% of the observable universe’s mass, the remaining 5% existing in the interior galaxies and gas clouds. A key premise of the model is that spacetime is fundamentally photonic in nature. This allows photon energy to be transferred to spacetime in the Hubble redshift and to be transferred back to photons in a novel blueshift. These exchanges together drive a cosmic energy cycle for gravity and the cosmological constant, Λ. Photons of the cosmic microwave background originating in the plasma shell lose energy to ‘cooler’ regions of spacetime in interior zones via the Hubble redshift. This gives rise to gravity through the optical gravity approach. The depleted photons moving back towards the shell are then reenergized in ‘hotter’ spacetime regions via the Hubble blueshift. These photons eventually exert outward pressures on the shell which perfectly balance the inward forces of gravity, in this manner functioning as Einstein’s cosmological constant. The observable universe behaves as a closed system in thermodynamic equilibrium with constant energy and entropy and indeterminate age. Black holes are suggested to have analogous plasma shell structures and gravity/Λ cycles.