You will need a dedicated server, definitely not shared hosting. Purchasing your own server will be the best value for money if you have staff to install LAMP+M. If not, get a dedicated server plan from a Moodle Partner. Note also that we have found internal LAN speeds with an on-campus server to be 2x or 3x faster than externally accessed off-campus via internet.
Our university has 5000 students and will eventually have about 200-300 courses per year. We run on a Dell SC1420 server which from our experience will handle 500 simultaneous users at a 50% load. Specs as follows...
- Dual Xeon 3.0ghz processor x 2
- No OS
- 2 GB memory
- 80 GB hard drive x 2