While i was trying to perform an upgrade to my ESXi installation i ran in to the below error:

Failed to update bootloader due to no space left on device.

The fix was pretty simple. The hypervisor doesnt have enough space to download and install the package so we need to enable one of the available datastores for the function.

For vCenter go to the host in question to Configure -> System -> System Swap

In Configure -> System -> System Swap, check swap file location for ESXi upgrade space.

While reviewing the configuration i noticed that i had 2 options enabled

System Swap options: can use host cache or datastore for swap files.

Clicking on the edit button on the right corner i noticed that i can add one of the datastores

Edit System Swap Settings: Choose datastore, enable host cache, use host-specified datastore.

After i Clicked ok i was able to continue with my upgrade