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It’s not as detectable as you think. One of the major things most VPS companies tout, is that the data is fully encrypted and private. So they aren’t scanning the files, or the running processes, or anything else about what is being done with the server.
So unless something external to the company is provided, which acts as proof, they won’t shut things down.
This is true for most providers but not the big big ones. Ask me how I know ;)
I'm curious if leaving the data-at-rest encrypted on the filesystem using something like EncFS would mostly solve this. (EncFS encrypts all the files on disk and gives you a mount point to access the corresponding cleartext filesystem)
Likely not, the thing is that most of the big cloud providers definitely have a networking team and it definitely monitors for bittorrent traffic. The thing is they will monitor but until they get a DMCA you normally don't get popped. However, some providers are more finnicky than others and will disable you immediately if you use 6881 w/o encryption. The key really is not to get a DMCA and not use default ports.