I wasn't particular enough. I pay around 80USD/month for a 4G/2CPU/3node k8s cluster where I'm able to host Mastodon, Synapse, Riot-web and Elasticsearch. Included in the price is a persistent volume of 20G and object storage for media.

The media storage is dirt cheap but it grows with the instance and users. One major issue some instance admins have is a lot of users uploading a lot of data.

My instance is very small and also blocked registrations to EU.

I expect to have enough capacity left over in my existing cluster to also host lemmy.

You don't need (and probably don't even want) every single participant doing this.

A given community can pool money on a server of their own, and federate it with other communities' servers if they want.

You can host a mastodon instance on a small server that doesn't cost this much, and you can pool the money with a few friends to have your own community for a few €/month :).

I remember people doing it with TeamSpeak, Minecraft, Counter-strike, etc. server, its the same !

That sort of cost is not necessary unless you're hosting a larger community. I run synapse (for myself, but it's idling at quite a low load so it could easily support more people) on a $10 USD/month Linode. For personal use you could get by on a $5 Nanode, but I'm using my VPS for other things, too.

The great thing about federation is that you don't have to host an entire community; just a slice of it.