The issue is solved now.
The password prompt was actually invisible and I could just type it in
and press Enter and then everything would load normally.
The commit 6d7e181ba18d11c92409a93936025fb46b9c8171 that changed the
kernel config was reverted in e49fdc231b0be00490fe1321888eb5c2acc480ac
and now everything is as usual.
I've also found a discussion on guix issues
https://issues.guix.gnu.org/66746 regarding the same problem.
One solution from there is adding
(initrd-modules (cons "simplefb" %base-initrd-modules))
which also worked for me to bring back the password prompt with the
problematic config.
