Is ice-encrusted frozen shrimp ok to eat?

This is how shrimp is frozen for transit and sale. The packaging should have a weight that includes the ice aswell as the shrimp, and a weight that is shrimp only weight: The weight after they have completely thawed.

There will also be a size grading. No of shrimp per lb or per KG based on whether they are HOSO Head On Shell On HLSO Headless Shell On or Peeled Break down here

The ice coating prevents freezer burn to the shrimp, so they'll be juicy when you defrost them rather than dry and hard! If the have freezer burn they'll be a opaque white discolouration on the surface. They're still OK eat like this - they're desecated / dried - they're just really tough.

Having said all this I am assuming that the packaging they're in in undamaged, before I say that they should be fine!

This is OK to eat. Ice buildup on frozen food happens through a normal process. It is not a sign of bad handling. The food has probably spent longish time in cold storage, but out is still safe. The taste should also be ok or only minimally changed, but certainly worth eating.

I found a bag of frozen shrimp which were hiding in the back of the freezer and the bag was full of frost. When I defrosted the shrimp, they're a little tough, but still tasty and good to eat. Probably will add them to soup or a cooked dish where they're not the only ingredient.