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Upload image

Hetzner Cloud does not support uploading custom images. You can email their support to get a Talos ISO uploaded by following issues:3599 or you can prepare image snapshot by yourself. There are two options to upload your own.
  1. Run an instance in rescue mode and replace the system OS with the Talos image
  2. Use Hashicorp packer to prepare an Image

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Rescue mode

Create a new Server in the Hetzner console. Enable the Hetzner Rescue System for this server and reboot. Upon a reboot, the server will boot a special minimal Linux distribution designed for repair and reinstall. Once running, login to the server using ssh to prepare the system disk by doing the following: To make sure disk content is consistent, it is recommended to shut the server down before taking an image (snapshot). Once shutdown, simply create an image (snapshot) from the console. You can now use this snapshot to run Talos on the cloud.

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Packer

Install packer to the local machine. Create a config file for packer to use: Additionally you could create a file containing 
arch            = "arm64"
server_type     = "cax11"
server_location = "fsn1"
and build the snapshot for arm64. Create a new image by issuing the commands shown below. Note that to create a new API token for your Project, switch into the Hetzner Cloud Console choose a Project, go to Access → Security, and create a new token. 
# First you need set API Token
export HCLOUD_TOKEN=${TOKEN}

# Upload image
packer init .
packer build .
# Save the image ID
export IMAGE_ID=<image-id-in-packer-output>
After doing this, you can find the snapshot in the console interface.

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Creating a Cluster via the CLI

This section assumes you have the hcloud console utility on your local machine. 
# Set hcloud context and api key
hcloud context create talos-tutorial

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Create a Load Balancer

Create a load balancer by issuing the commands shown below. Save the IP/DNS name, as this info will be used in the next step. 
hcloud load-balancer create --name controlplane --network-zone eu-central --type lb11 --label 'type=controlplane'

### Result is like:
# LoadBalancer 484487 created
# IPv4: 49.12.X.X
# IPv6: 2a01:4f8:X:X::1

hcloud load-balancer add-service controlplane \
    --listen-port 6443 --destination-port 6443 --protocol tcp
hcloud load-balancer add-target controlplane \
    --label-selector 'type=controlplane'

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Create the Machine Configuration Files

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Generating Base Configurations

Using the IP/DNS name of the loadbalancer created earlier, generate the base configuration files for the Talos machines by issuing: 
$ talosctl gen config talos-k8s-hcloud-tutorial https://<load balancer IP or DNS>:6443
created controlplane.yaml
created worker.yaml
created talosconfig
At this point, you can modify the generated configs to your liking. Optionally, you can specify machine configuration patches which will be applied during the config generation.

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Validate the Configuration Files

Validate any edited machine configs with: 
$ talosctl validate --config controlplane.yaml --mode cloud
controlplane.yaml is valid for cloud mode
$ talosctl validate --config worker.yaml --mode cloud
worker.yaml is valid for cloud mode

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Create the Servers

We can now create our servers. Note that you can find IMAGE_ID in the snapshot section of the console: https://console.hetzner.cloud/projects/$PROJECT_ID/servers/snapshots.

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Create the Control Plane Nodes

Create the control plane nodes with: 
export IMAGE_ID=<your-image-id>

hcloud server create --name talos-control-plane-1 \
    --image ${IMAGE_ID} \
    --type cx21 --location hel1 \
    --label 'type=controlplane' \
    --user-data-from-file controlplane.yaml

hcloud server create --name talos-control-plane-2 \
    --image ${IMAGE_ID} \
    --type cx21 --location fsn1 \
    --label 'type=controlplane' \
    --user-data-from-file controlplane.yaml

hcloud server create --name talos-control-plane-3 \
    --image ${IMAGE_ID} \
    --type cx21 --location nbg1 \
    --label 'type=controlplane' \
    --user-data-from-file controlplane.yaml

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Create the Worker Nodes

Create the worker nodes with the following command, repeating (and incrementing the name counter) as many times as desired. 
hcloud server create --name talos-worker-1 \
    --image ${IMAGE_ID} \
    --type cx21 --location hel1 \
    --label 'type=worker' \
    --user-data-from-file worker.yaml

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Bootstrap Etcd

To configure talosctl we will need the first control plane node’s IP. This can be found by issuing: 
hcloud server list | grep talos-control-plane
Set the endpoints and nodes for your talosconfig with: 
talosctl --talosconfig talosconfig config endpoint <control-plane-1-IP>
talosctl --talosconfig talosconfig config node <control-plane-1-IP>
Bootstrap etcd on the first control plane node with: 
talosctl --talosconfig talosconfig bootstrap

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Retrieve the kubeconfig

At this point we can retrieve the admin kubeconfig by running: 
talosctl --talosconfig talosconfig kubeconfig .