Do they continue to charge you even if the server is powered off?

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Yes they do. They give you a big warning say that you will still be charged even when your droplet is off. You have to destroy the droplet.

What you could do but I haven't tried is after you destroyed the droplet is create and exact droplet in terms of hardware and restore a snapshot or backup to the new droplet.

Snapshots and backups are cheap to store.