Hi Sumedh,
No negative performance impact. Advantage is that Temporary disk and Cache are encrypted in addition to OS and data disks and data traveling from host to storage is encrypted. Please see comparison chart below:
Easy to implement.
First register the feature in your subscription if you haven't already using below powershell command:
Register-AzProviderFeature -FeatureName "EncryptionAtHost" -ProviderNamespace "Microsoft.Compute"
Next, in the portal, Deallocate the VM, then navigate to the VM's Disks blade -- Additional settings button, select Yes for Encryption at host, click Save, then start the VM.
Screenshot of disk settings where you need to select yes:
Please see article below for more detailed information:
https://learn.microsoft.com/en-us/azure/virtual-machines/disks-enable-host-based-encryption-portal
Please click Accept Answer if the above was useful. If you have additional questions or if something I wrote is unclear add a comment.
Thanks.
-TP