Minimalistic way to create cloud image from ISO with QEMU

Install qemu

This snippet for Mac OS, at Linux dists replace brew to apt/apk/yum/pkg

brew install qemu

Create empty hard disk raw image

Specify explicit image format (couse choosing qcow2 is minimal result image size), 1-st argument image name and 2-nd arg size.

qemu-img create -f qcow2 raw_hdd_10.qcow2 10G

Create virtual machine

After qemu-system- you can press tab and choose your cpu architecture, in my case is -x86_64. Then specify -boot disk d (it's cdrom), -cdrom image path and main hdd (-hda) image path.

qemu-system-x86_64 -boot d -cdrom ~/Downloads/alpine-virt-3.13.2-x86_64.iso -hda hdd10.qcow2

Install OS from bootable iso to hdd

In Alpine case:

setup-alpine
exit

Shutdown VM, and

Load installed OS from hdd image

qemu-system-x86_64 -hda hdd10.qcow2

Now you can make any your custom changes in OS.
At finally..
Filling nulls all free space for better compress hdd image, showing count nulled blocks (-v), From root mount point /

fstrim -v /
exit

Compress resulted image

Specify input -f and output -O image format, compression flag -c, then input and output image paths (they may be equal, if you don't need backup)

qemu-img convert -f qcow2 -O qcow2 -c hdd10.qcow2 hdd10-compressed.qcow2

Voila!
Tommorow we'll upload your custom image hdd10-compressed.qcow2 to cloud using openstack.