Using base64 encoded private keys as part of config can provide access to unauthorized users provided config is exposed.
For more information on how to setup launch configurations, see the AWS documentation.
In Terraform -
References:
https://docs.aws.amazon.com/autoscaling/ec2/userguide/create-asg-launch-configuration.html
https://registry.terraform.io/providers/hashicorp/aws/latest/docs/resources/launch_configuration