In practice, it is harder to dump the memory of a bare metal server than it is to simply yank out a hard drive. (It is, of course, possible - the technique is beyond many hosting companies and local police, and the effectiveness depends on the temperature.)

In theory, the hosting provider, having physical access, has both the key (in RAM) and the cyphertext on disk, so logically there is little point.

It’s worth noting that my hosted bare metal boxes have encrypted data partitions with keys I provide over ssh each boot.

Of course, if it is a VM, anyone with root on the hypervisor (i.e. the hosting company) can trivially dump the memory and encryption keys.

Encryption at rest. So, if a hard disk (including a turned-off laptop) is stolen, mishandled, or not destroyed properly.

Someone physically attacking a running computer is a different, and much harder, threat model.

This is why companies employing fde will also require laptops to be shutdown before being moved.