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Not parent commenter, but I use ansible + plain bash scripts/virsh/XML definitions to manage my libvirt instances/"cluster", it just works.
I have been running Proxmox on the side/at work, I like it as well but never took the time to dive in the API/automation side of things. libvirt is simpler but still powerful.
Oh right, there is the XML aspect that I didn't consider.
I have to say that I very much have a preference for the declarative terraform strategy vs ansible, and I saw that the libvirt terraform provider is quite mature. I have seen that there are even some providers for proxmox (but less mature in my opinion), so it seems that either way the machine definition could be codified and automated. But the thing is, if the machines are all in Terraform code, basically there is no much use of proxmox (metrics are going to be in node exporter, maybe just backups and snapshots?).
Ansible can be declarative if you do it right, and take the time to write a few roles to manage your use case. For example my ansible libvirt config looks like this:
This is the only config I ever touch since the role handles changing configuration, running/stopping VMs, networks, etc. transparently. For initial provisioning I have a shell script that wraps around
virsh/virt-install/virt-sysprep
to setup a new VM in ~1 minute (It uses a preseed file, which is similar to what cloud-init offers). This part could be better integrated with ansible. Terraform has other advanced features such as managing hosts on cloud providers, but I don't need those at the moment. If I ever do, I think I would still use ansible to run terraform deployments [1]Edit: the libvirt role if you're curious