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There exists already a perfectly working docker container https://github.com/lloesche/valheim-server-docker with automatic backups and updates. All that is left to do is to mount an azure file storage into the container for persisting the world and setting the environment variables for configuration.
Alright I went ahead and did the same, but on Linux following this guide. The extra step I took was to setup a Start/Stop with Azure Automation for hours we'll rarely be playing. That should help cut down on monthly cost.