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I'm planning on moving to Amazon EC2 If I purchased the 'small instance" which has 160 GB instance storage. Can I increase the instance storage say up to a terabyte? Should I move to the "large instance" or is it possible to just increase the storage capacity?

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You can add an EBS-block to your instance. These can be up to 1 TB. EBS volumes are off-instance storage that persists independently from the life of an instance. So when you change instances, you can take your storage with you.

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