diff --git a/.drone.jsonnet b/.drone.jsonnet
index b1c59bf5b..dd47b2ceb 100644
--- a/.drone.jsonnet
+++ b/.drone.jsonnet
@@ -367,6 +367,7 @@ local integration_disk_image = Step("e2e-disk-image", target="e2e-qemu", privile
         "SHORT_INTEGRATION_TEST": "yes",
         "USE_DISK_IMAGE": "true",
         "IMAGE_REGISTRY": local_registry,
+        "WITH_DISK_ENCRYPTION": "true",
 });
 local integration_canal_reset = Step("e2e-canal-reset", target="e2e-qemu", privileged=true, depends_on=[integration_disk_image], environment={
         "INTEGRATION_TEST_RUN": "TestIntegration/api.ResetSuite/TestResetWithSpec",
diff --git a/internal/app/machined/pkg/runtime/v1alpha1/v1alpha1_sequencer.go b/internal/app/machined/pkg/runtime/v1alpha1/v1alpha1_sequencer.go
index a3546b4db..57067f93f 100644
--- a/internal/app/machined/pkg/runtime/v1alpha1/v1alpha1_sequencer.go
+++ b/internal/app/machined/pkg/runtime/v1alpha1/v1alpha1_sequencer.go
@@ -184,6 +184,10 @@ func (*Sequencer) Boot(r runtime.Runtime) []runtime.Phase {
 	phases := PhaseList{}
 
 	phases = phases.AppendWhen(
+		r.State().Platform().Mode() != runtime.ModeContainer,
+		"saveStateEncryptionConfig",
+		SaveStateEncryptionConfig,
+	).AppendWhen(
 		r.State().Platform().Mode() != runtime.ModeContainer,
 		"mountState",
 		MountStatePartition,
diff --git a/internal/app/machined/pkg/runtime/v1alpha1/v1alpha1_sequencer_tasks.go b/internal/app/machined/pkg/runtime/v1alpha1/v1alpha1_sequencer_tasks.go
index 853ee822c..f9ef14424 100644
--- a/internal/app/machined/pkg/runtime/v1alpha1/v1alpha1_sequencer_tasks.go
+++ b/internal/app/machined/pkg/runtime/v1alpha1/v1alpha1_sequencer_tasks.go
@@ -1485,7 +1485,13 @@ func MountStatePartition(seq runtime.Sequence, data interface{}) (runtime.TaskEx
 		//nolint:errcheck
 		defer meta.Close()
 
-		opts := []mount.Option{mount.WithFlags(mount.SkipIfMounted)}
+		flags := mount.SkipIfMounted
+
+		if seq == runtime.SequenceInitialize {
+			flags |= mount.SkipIfNoFilesystem
+		}
+
+		opts := []mount.Option{mount.WithFlags(flags)}
 
 		var encryption config.Encryption
 		// first try reading encryption from the config
diff --git a/internal/pkg/mount/mount.go b/internal/pkg/mount/mount.go
index 2867c15ef..d0d597511 100644
--- a/internal/pkg/mount/mount.go
+++ b/internal/pkg/mount/mount.go
@@ -14,6 +14,7 @@ import (
 	"time"
 
 	"github.com/talos-systems/go-blockdevice/blockdevice"
+	"github.com/talos-systems/go-blockdevice/blockdevice/filesystem"
 	"github.com/talos-systems/go-blockdevice/blockdevice/util"
 	"github.com/talos-systems/go-retry/retry"
 	"golang.org/x/sys/unix"
@@ -44,6 +45,7 @@ func Mount(mountpoints *Points) (err error) {
 	return nil
 }
 
+//nolint:gocyclo
 func mountMountpoint(mountpoint *Point) (err error) {
 	var skipMount bool
 
@@ -61,6 +63,10 @@ func mountMountpoint(mountpoint *Point) (err error) {
 		}
 	}
 
+	if mountpoint.MountFlags.Check(SkipIfNoFilesystem) && mountpoint.Fstype() == filesystem.Unknown {
+		skipMount = true
+	}
+
 	if !skipMount {
 		if err = mountpoint.Mount(); err != nil {
 			return fmt.Errorf("error mounting: %w", err)
diff --git a/internal/pkg/mount/options.go b/internal/pkg/mount/options.go
index 38a237e16..3eb36b5e5 100644
--- a/internal/pkg/mount/options.go
+++ b/internal/pkg/mount/options.go
@@ -19,6 +19,8 @@ const (
 	Overlay
 	// SkipIfMounted is a flag for skipping mount if the mountpoint is already mounted.
 	SkipIfMounted
+	// SkipIfNoFilesystem is a flag for skipping formatting and mounting if the mountpoint has not filesystem.
+	SkipIfNoFilesystem
 )
 
 // Flags is the mount flags.
diff --git a/internal/pkg/mount/system.go b/internal/pkg/mount/system.go
index a1e32e36a..8ad6275a0 100644
--- a/internal/pkg/mount/system.go
+++ b/internal/pkg/mount/system.go
@@ -157,9 +157,13 @@ func SystemMountPointForLabel(device *blockdevice.BlockDevice, label string, opt
 			return fmt.Errorf("failed to determine format options for partition label %s", part.Name)
 		}
 
-		p.fstype = opts.FileSystemType
+		if !o.MountFlags.Check(SkipIfNoFilesystem) {
+			p.fstype = opts.FileSystemType
 
-		return partition.Format(p.source, opts)
+			return partition.Format(p.source, opts)
+		}
+
+		return nil
 	})
 
 	opts = append(opts, WithPreMountHooks(preMountHooks...))