I have some old mini-PC in my living room that's running a hypervisor and a few VMs. One of those VMs is used for pihole. I used docker and docker compose for this.

My docker-compose.yaml is a little more fancy than that because I deploy it via GitLab CI, but here's the kind of config you can expect:

# More Info and full example docker-compose here:
#   https://github.com/pi-hole/docker-pi-hole/#running-pi-hole-docker
services:
  pihole:
    container_name: pihole
    hostname: pihole
    image: pihole/pihole:latest
    ports:
      - "53:53/tcp"
      - "53:53/udp"
      - "80:80/tcp"
      - "443:443/tcp"
    environment:
      PIHOLE_UID: '1000'
      PIHOLE_GID: '1000'
      TZ: 'YOUR_SERVER_TIMEZONE'
      FTLCONF_webserver_api_password: "YOUR_PIHOLE_ADMIN_PASSWORD"
      FTLCONF_dns_listeningMode: 'all'
    volumes:
      - etc-pihole:/etc/pihole
    restart: unless-stopped

I mostly copy-pasted that from the official pihole docker compose quick-start example.

To update, you would just need to run the following in the same directory as the docker-compose.yml file.

docker compose stop
docker compose pull
docker compose up -d

If pihole is the only thing you really want to run, a new machine and hypervisor are too much for just that. If ad-free surfing is all you want, you can just get a raspberry pi and setup pihole on that thing. You can still use docker compose, as the pihole images are available for ARMv6, ARMv7 and ARM64.

You'd be better off just getting a Pi 3b+ or better and hooking it directly into your router. It's super unnecessary to run it as a VM unless you're using a bare bones hypervisor.

Docker compose.