I will double on Visvanath's recommendation, regarding security, hosted VPS's are hardened by hosting provider anyway, last thing they want is server holding VPS's going down getting a black spot on their reliability. even if every or most of security aspects are dealt with at your end, how would you cater the DDoS attacks? for that you need to have a beefy network supply and many hosting providers now include DDoS attack coverage for free in their packages,
Hardware and performance
Moodle in cluster
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