Internal Phone Storage corrupted

Hi,
I am running MIUI V13 on HongMi. After connecting the phone to my laptop via USB, my phone rebooted and the phone complains that the SD Card is corrupted. I checked and found that the "Phone Storage" is not there any more.

Question 1: Do I go ahead to reformat the Phone Storage?
Question 2: Is it a bug on USB connection?

Thanks
Ryan