You can use an external drive if it's mounted as a writable volume. I would make sure it's fast, maybe thunderbolt 3/4/5 enclosure with a fast drive.

FYI, Thunderbolt 3 NVMe enclosures will be 10Gbps and 4 will be 40Gbps which is a big difference (and you'll notice it in the pricing as well)

The Github specifically mentions an option to stream it from an online host. It's extremely slow.