Lemmy in the last few days is absolutely tiny compared to a site like reddit, and already instances are struggling to cope.

While this is true, 5 days ago lemmy.ml, the biggest instance, was on a 67 EUR server which is very small. https://news.ycombinator.com/item?id=36270094

Posts like this: https://lemm.ee/post/58472 suggest it is a problem

This is a scaling problem (having more users means you need more mods) but I disagree with how they handled it and it isn’t a money related thing. My thoughts on this are in an older post when this was first announced https://partizle.com/comment/64178

Why should a handful of “lucky” servers have to pay all the hosting costs?

My initial idea is to use the something awful model of paying a one time fee to register an acount. The problem is that people would just sign up on another instance that doesn’t charge a fee but still add load to the lucky instance. Another approach could be to participate in communities on one of those lucky servers then you need to pay a one time fee to that server (comments would need to be removed by a bot if they’re not made by an approved user). I’m not saying that’s perfect, but it’s an idea. Adsense is another idea.