All LXD virtual machines are hitting this too.

Run:
 - lxc launch images:ubuntu/focal/cloud f1 && lxc console f1

And you'll see it show that message. As mentioned above, boot then still
goes ahead and you get a login prompt, but as that may not always be the
case.

For example in linux-kvm, that fallback mechanism doesn't appear to work and we 
instead get a kernel panic unless we've manually modified the initrd to be gzip:
https://bugs.launchpad.net/cloud-images/+bug/1873809

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https://bugs.launchpad.net/bugs/1835660

Title:
  initramfs unpacking failed

Status in initramfs-tools package in Ubuntu:
  Invalid
Status in linux package in Ubuntu:
  Confirmed

Bug description:
  "initramfs unpacking failed: Decoding failed",  message appears on
  boot up.

  If I "update-initramfs" using gzip instead of lz, then boot up passes
  without decoding failed message.

  ---

  However, we currently believe that the decoding error reported in
  dmesg is actually harmless and has no impact on usability on the
  system.

  Switching from lz4 to gzip compression, simply papers over the
  warning, without any benefits, and slows down boot.

  Kernel should be fixed to correctly parse lz4 compressed initrds, or
  at least lower the warning, to not be user visible as an error.

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