so, there are pros and cons in both setups, but i can share my experience as i have been managing linux systems for more than 15 years now.
for testing i’m usually using local servers, as i don’t worry much about internet speed (and reliability / backup links), hardware failures, electricity failures… but when i’m setting up a production server, i would go with a VPS (either on DigitalOcean, AWS or GCP) as these platforms give me:
Scalability (i can downgrade / upgrade in no-time, add more servers, add more space, add more memory)
- out of the box backup solutions
Fast and reliable internet connection (usually > 1Gbit)
No unexpected expenses (hardware failure, extra space, hardware upgrades)
Regional presence (i can always start a server which is closer to my customers, or to have a global presence, i can start servers in different regions)
- extra features (load balancing, firewall, monitoring tools, shared spaces, console login from anywhere, etc)
so, i wold go with a VPS with minimum 2vCPU 4GB. 4vCPU 8GB should be enough for current needs.