I wonder about this a lot. The little research I did suggested DigitalOcean is footing the bill for the moment (and also for Pixelfed? would love to hear more about this). Google, Facebook, TikTok, etc… have all managed to throw enough resources at similar products that people expect a level of performance that is very expensive to maintain. There is some serious hardware and distribution issues ($$$$) with trying to host an “instant and endless stream of short form video”.

In a counter point though I think large instances like lemmy.world and lemmy.ml have found ways to survive and thrive and the fediverse generally seems to be supported in a very grassroots sort of fashion. Donations, patrons, people who have the hardware and bandwidth sharing what they can for the greater community. Perhaps loops will go the same way.