That is a nice PC explanation for the 21st century, but concern for the native population may not have been the main factor. Another possibility is that the days when countries sold off part of their territory for money had passed.
Iceland was part of Norway until WW2. Denmark could not have held Greenland against Soviet pressure. A great circle route between the U.S. and the USSR passes over or near Greenland. It is important strategic territory. Denmark has been very cooperative with the US on strategic matters concerning Greenland, out of self interest. If they want to retain their 20,000 welfare clients, who are we to complain?