Credit to this Reddit article.
Yes you do need to create a domain ending in .onmicrosoft.com.
Full MS instructions are here: https://learn.microsoft.com/en-us/sharepoint/change-your-sharepoint-domain-name#advanced-tenant-rename
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To do this navigate here https://admin.microsoft.com/adminportal/home#/Domains
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Don't click 'Add Domain', as this will try to create a brand new domain and will try to get you to add TXT CNAME DNS entries to your domain host (which in this instance will be microsoft not your ISP Host so that won't work).
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Instead to add the new .onmicrosoft.com domain you need to click on the existing old GoDaddy NETORGFT****.onmicrosoft.com domain, then at the bottom right of this Overview screen locate a hyperlink tited 'Add onmicrosoft.com domain (preview)'.
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Here you can create your new tenant name very easily.
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Once created, return here https://admin.microsoft.com/adminportal/home#/Domains and see that the new domain is verified with the green tick.
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Once you have done this, ensure you have downloaded the SharePoint Online Management Shell and that the version is up to date: https://www.microsoft.com/en-au/download/details.aspx?id=35588
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Run SharePoint Online Management Shell as an administrator:
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Type into the Shell: Connect-SPOService https://NETORGFT*******-admin.sharepoint.com
(Replace the asterisks in the above link with your own GoDaddy numerics)
9) Authenticate yourself in the login screen which appears (Nb you must use a user with global administrator rights)
10) Once logged in type:
Start-SPOTenantRename -DomainName ********* -ScheduledDateTime “2024-07-08T16:00:00”
(Replace the astericks above with the first part of your new tenant name that you created in step 1. This is the first part only, NOT including the .onmicrosoft part)
(Also Nb. please change the date and time to a future date AT LEAST 24 hours ahead and < 30 days ahead - Date and time format is YYYY-MM-DDTHH:MM:SS)
Hit Enter
11) All going well and no errors you will be prompted with a warning about potential impacts
Confirm Are you sure you want to perform this action? Performing the operation "Start-SPOTenantRename." [Y] Yes [A] Yes to All [N] No [L] No to All [S] Suspend [?] Help (default is "Y"): Y Success
12) Type Y and Enter to proceed. The next and final message will hopefully be:
Success
RenameJobID : ec130f05-772f-4414-9h8f-454739