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.

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.