dataloss It seems plausible that the issue with your device may be a hardware failure.
Sideloading a new GrapheneOS OTA image will help if somehow the system partition on the device is corrupted, perhaps if some small area of the flash storage containing the system partition has gone bad, and the file system plus the flash controller can work around it if the entire partition is rewritten.
But sideloading an OTA image won't work if the flash storage is sufficiently bad that it can't store and read back the OTA image, which seems consistent with the errors you posted. Also, sideloading an OTA image won't work if the user data partition is corrupted or if the flash storage is genuinely in bad shape.
It is possible that a forensic data-recovery company might be able to restore some data if they have the device and your PIN/password, but this is not at all certain. In particular, if the flash storage is sufficiently damaged it may not be possible for them to extract anything. That said, it might be your best option at present.