Minimizing EC2 Instance Costs for Long-Term Utilization

Answer - A.

When you have instances that will be used continuously and throughout the year, the best option is to buy reserved instances.

By buying reserved instances, you are actually allocated an instance for the entire year or the duration you specify with a reduced cost.

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To minimize the costs for hosting EC2 instances for a duration of more than 3 years in the AWS Cloud, we would utilize Reserved Instances.

Reserved Instances are a billing discount mechanism provided by AWS, allowing customers to reserve capacity for a specific instance type in a specific Availability Zone for either a one-year or three-year term.

In exchange for this commitment, AWS offers a significant discount on the hourly charge for running instances. Additionally, there are various types of Reserved Instances, such as Standard Reserved Instances, Convertible Reserved Instances, and Scheduled Reserved Instances, which provide different levels of flexibility in exchange for different pricing discounts.

On-demand instances are instances that can be launched at any time and are billed by the hour, with no upfront commitment. These instances are useful when you need instances for a short period or require flexibility in scaling up or down.

Spot instances are spare compute capacity in AWS data centers that are available for a much lower price than On-demand instances. However, these instances are subject to price fluctuations based on demand, and AWS can terminate these instances with a two-minute warning when the spot price exceeds your bid.

Regular instances refer to On-demand instances, which are billed by the hour, with no upfront commitment.

Therefore, the most cost-effective option for hosting EC2 instances for more than three years in the AWS Cloud would be Reserved Instances.