Reduce KVM disk size with dd and sparsify
You can convert a raw or qcow2 non-sparse image to a sparse image with dd and sparsify. Or you can reduce the size of an existing image again.
Install the libguestfs-tools on your system
apt-get install libguestfs-tools
Now copy your existing image to a new one with dd
dd if=existing_imagefile.raw of=new_imagefile.raw conv=sparse
Afterwards use virt-sparsify to reduce your disk size again (in this example I sparsed and converted the image in just one step)
virt-sparsify new_imagefile.raw --convert qcow2 new_imagefile.qcow2
In my case I converted a block device with 65GB with dd sparse to 40GB raw image and afterwards I used virt-sparsify to reduce the size down to 6.8GB.
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