Proxmox Virtualization on Bare Metal: Performance, Cost, and Compliance Compared to Public Cloud

The many businesses the public cloud has provided reliability and simplification of IT services. A decade later, some organizations are facing a predicament, a new set of challenges: escalating costs, unpredictable performance, and complex compliance requirements. For some, adapting to an operational expenditure (OpEx) model has sometimes resulted in “bill shock,” driven by data egress fees and metered IOPS.

For some businesses, this problem has prompted a strategic re-evaluation if the costs associated with specific workloads merit cloud infrastructure, or whether there is a better, more cost effective option. IT and FinOps leaders are recognizing that for stable, mission-critical workloads, the public cloud’s multi-tenant model may not be the best fit.

At Atlantic.Net, we are seeing a growing trend of cloud repatriation for specific workloads—or more accurately, a shift to a strategic hybrid model. The primary goal is to regain control over cost and performance, and a key enabler of this is Proxmox bare metal virtualization.

This article is a guide for decision-makers comparing the Proxmox bare metal model to public cloud platforms across three critical business objectives: Performance, Cost, and Compliance.

What Is “Proxmox Bare Metal” Virtualization?

Before we compare, let’s establish a clear definition. Unlike public cloud platforms, which are typically massive, multi-tenant SaaS offerings, Proxmox VE (Virtual Environment) is an open-source virtualization platform.

It is installed directly on dedicated, physical hardware—referred to as “bare metal.”

This creates a private, high-performance IaaS platform. It is a comprehensive virtualization solution integrating several key technologies:

• KVM (Kernel-based Virtual Machine): As the foundation, KVM is a Type-1 hypervisor built directly into the Linux kernel. It delivers high-speed, secure, and stable, near-native hardware performance.
• LXC (Linux Containers): For workloads where a full VM is unnecessary, Proxmox supports lightweight containers. These are ideal for microservices and applications that can be provisioned in seconds with minimal resource overhead.
• Central Web-Based Management: A single web interface allows teams to manage all virtual machines, containers, high-availability clustering, networking, and integrated backups.
• Flexible Storage: Proxmox natively supports advanced storage solutions like ZFS (for data integrity and encryption) and Ceph (for building scalable, distributed storage clusters).

Running Proxmox on dedicated servers combines the raw, single-tenant performance of dedicated hardware with the flexibility of a cloud-native virtualization stack. If you are coming from a VMware background, you will appreciate the ease of use of Proxmox and will no doubt pick it up quickly.

Performance & Control

Performance in the public cloud is a variable, metered resource. Performance on bare metal is a fixed, dedicated asset.

The Public Cloud: The Challenge of Contention

In a public cloud, your Virtual Machine (VM) runs on a physical server alongside numerous other “tenants.” You typically share the same physical CPU cores, RAM, network uplinks, and storage controllers.
This has the potential to cause creates three problems:

• “Noisy Neighbors”: If another tenant on your shared hardware runs an intensive job, your application’s performance can suffer. This is visible as “CPU Steal Time,” where your VM is ready to execute, but the physical CPU is busy with another tenant’s workload.
• Throttled I/O: Storage performance (measured in IOPS) is one of the most common metered and throttled resources. To increase database speed, you must pay to upgrade to a “Provisioned IOPS” tier, even if the underlying hardware is capable of more.
• Vendor Lock-In: Public cloud services are often proprietary, creating dependencies that can be difficult to migrate from.

Proxmox Bare Metal

A Proxmox bare metal server is, by definition, single-tenant. All resources on that machine are dedicated to you.

• 100% Dedicated CPU & RAM: There are no “noisy neighbors” and no “CPU Steal.” Your mission-critical database or application gets every clock cycle it demands. Performance is not only high, but also predictable.
• Full Hardware I/O: You receive the full, unthrottled throughput of the underlying physical storage. With modern NVMe SSDs, this provides a significant performance advantage over general-purpose, throttled cloud storage tiers without incurring per-IOPS fees.
• Total Network Control: You control the virtual network stack and can create isolated private VLANs for backend database replication or cluster communication. This traffic is more secure and incurs no cost. In the public cloud, all data transfers, even inter-regional, are subject to egress fees.

Public cloud offers abstracted performance which is great for some less intense workloads, however, Proxmox bare metal offers deterministic performance. For any workload that is latency-sensitive or data-intensive (databases, analytics, real-time applications), bare metal provides a huge advantage.

Total Cost of Ownership

Cost is a primary driver for organizations exploring alternatives. The Proxmox TCO (Total Cost of Ownership) model is structurally different and more predictable than the public cloud’s metered model.

The Public Cloud: Pay-As-You-Go Cost Model

Public cloud is cost-effective to start but can become expensive to scale. The “pay-as-you-go” model meters nearly all resources.
Key drivers of high costs include:

• Data Egress Fees: Charges for data transfers (outbound or inter-regional) are a significant and often unpredictable expense. Check your cloud providers egress limits, some offer set allocations of free bandwidth, while others charge for every byte.
• Metered Performance: As mentioned, users pay premiums for every IOPS, GB of “premium” storage, “high-CPU” instance, and managed service (e.g., NAT Gateways, Load Balancers).
• The OpEx Trap: A 100% OpEx model, while attractive for new ventures, can become an unpredictable and escalating operational cost for established businesses.

The Proxmox TCO Advantage

The Proxmox bare metal model offers a predictable cost structure, whether hardware is purchased (Capex) or leased (predictable Opex).
The cost advantages are significant:

• Zero Software Licensing Fees: Proxmox VE is open-source, eliminating per-CPU, per-socket, or per-VM licensing fees common to proprietary solutions like VMware.
• No Data Egress Fees: Dedicated servers typically include a large bandwidth allowance (e.g., 20TB) on a high-speed (e.g., 1Gbps) port. Data transfer is included, removing the variable egress fee.
• Inclusive Performance: All hardware performance (CPU, I/O) is included in the cost. You do not pay extra for faster I/O.
• Workload Consolidation: A single, powerful Proxmox server can replace numerous smaller public cloud instances, leading to a significant TCO reduction.

The trade-off is that open-source virtualization requires technical management expertise. This can be addressed via a hybrid approach, partnering with a provider to manage the hardware, network, and Proxmox layer, retaining the TCO benefits.

Compliance & Security

For organizations in healthcare, finance, or AdTech, compliance is a foundational requirement. The Proxmox vs. public cloud models present different approaches to control and auditability.

The Public Cloud: The “Shared Responsibility” Model

In the public cloud, you operate under a “Shared Responsibility Model.” The provider secures the cloud, but the customer is responsible for security in the cloud.
This can create audit challenges:

• Lack of Physical Attestation: Unless you use specialized HIPAA-compliant hosting, it is difficult to prove to an auditor that ePHI data, for example, never co-existed on the same physical hardware as another tenant’s data.
• Configuration Complexity: Achieving true network isolation for PII requires complex VPC, security group, and private link configurations, where missteps can lead to exposure.
• Data Sovereignty: Data can be replicated by the provider, making it difficult to guarantee data residency requirements (e.g., ensuring EU customer data remains in the EU).

The Proxmox Bare Metal Advantage

A Proxmox bare metal environment provides a clearer model of responsibility and control.

• Physical Single-Tenancy: This is the core compliance control. An organization can state with 100% certainty that the server is dedicated. No other customer’s data has resided on its memory, CPUs, or disks, which simplifies HIPAA or SOC 2 audits.
• Total Network Isolation: A truly segmented network can be created. For example, a dedicated VLAN can be provisioned for a database server with no routes to the public internet. This “data enclave” is straightforward to implement and audit.
• Full Audit Trail: Root access to the host machine allows for 100% of system, authentication, and firewall logs to be forwarded to a SIEM, rather than being limited by the provider’s logging API.
• The Business Associate Agreement (BAA): A compliance-focused provider for Proxmox bare metal can offer a BAA that covers the entire stack: the audited data center, the network, and the physical hardware.

For any organization handling ePHI (HIPAA) or sensitive PII (GDPR, CCPA), this level of provable physical and network control is a significant advantage

Conclusion: Hybrid Approach

The comparison is not an “either/or” proposition. An effective IT strategy is typically a hybrid one. The public cloud remains an excellent tool for ephemeral workloads, serverless functions, and elastic applications.

However, for core, mission-critical applications—such as databases, ERPs, and high-throughput analytics platforms—the case for bare metal is compelling.
The Proxmox TCO is typically lower overall, the performance is guaranteed, and the compliance posture is stronger. The shift to open-source virtualization on bare metal is a strategic move to regain control over performance, cost, and data.

This transition may seem daunting, but you don’t have to make it alone. For 30 years, Atlantic.Net has specialized in providing the secure, high-performance, and compliant infrastructure that enables businesses to build their own clouds.

We provide the BAA-backed, audited data center environment, the high-performance dedicated servers, and 24×7 expert support. And with our managed services, we can even handle the Proxmox layer for you, giving you all the benefits of a private cloud without the day-to-day management overhead.

Would you like to explore how a Proxmox bare metal solution could reduce your cloud spend and improve performance? Get in touch today.