Encrypted APFS external drive won't mount

The file system is corrupt. Try running First Aid several times to see if it will slowly fix some errors with each pass. If after several attempts the same errors remain, then you will need to start over by erasing the whole physical drive.

Did you use a third party app such as DriveDx to check the health of the external backup drive? Even then, you need to install a special USB driver in order to access the external drive's SMART health information. The SMART health information is not available without this special USB driver. And the Disk Utility "SMART status" indicator will only alert when the drive is nearly dead...it will not warn you when a problem starts to occur....and Disk Utility cannot read the SMART health information of external drives at least without having a special USB driver installed.

FYI, the encryption is rarely ever a problem in performance or other issues. I think I only ever encountered one Apple encrypted drive where decrypting the drive was necessary to fix a problem. Usually decrypting a drive to troubleshoot a problem is the worst thing to do since it leaves the file system in a mixed state (partially encrypted & partially decrypted/unencrypted. When this happens the file system usually cannot be repaired and data recovery apps are unable to work properly.

I'm not sure if you noticed, but the encrypted volume was unlocked and the problem was actually mounting the unlocked volume. Unfortunately Disk Utility doesn't provide a distinction & gives a misleading error message. The truth is revealed when using the command line.

The APFS file system is corrupt. That is the source of the problem....the encryption had nothing to do with it (although it may now be playing a part if the drive is a mixed state of encrypted & unencrypted).

You can try using a data recovery app such as Disk Drill or Stellar Data Recovery to scan the volume to see what it may be able to find. However, if the data recovery app needs to do an extended or raw scanning of the drive, then you will only be presented within hundreds of thousands of unnamed files & folders sorted only by approximate file type. They usually allow you to scan a drive to see what items they can find. They may even allow you to recover a few small files as a test before requiring you to pay.