Virtualization introduces a hypervisor layer between your Monero software and the hardware. While modern hypervisors are secure, a dedicated server eliminates this layer entirely. Your Monero node runs directly on hardware with no intermediary software.
For privacy-conscious Monero operators, this matters. No hypervisor means no theoretical side-channel attacks through shared hardware, no memory deduplication risks, and complete control over the software stack from bootloader to application.
Dedicated hardware also means you control disk encryption at the hardware level. Full-disk encryption with keys you manage ensures even physical server access cannot compromise your Monero node data.