If file2 needs to be created from scratch:

awk -F: -v OFS='=' '{
    split($1, a, "-")
    print toupper(a[1])"_SERVICE", $2
}' file1 > file2

If file2 already has variables that need to be overwritten:

#! /usr/bin/env bash
awk -F: -v OFS='=' '{
    if (FNR == NR) {
        split($1, a, "-")
        var[toupper(a[1])] = $2
    } else {
        split($0, a, "=")
        split(a[1], b, "_")
        if (var[b[1]] != "") {
            print a[1], var[b[1]]
        } else {
            print
        }
    }
}' file1 file2 > file2_new

mv file2_new file2

Second snippet explaination:

1) awk loops through the input files line by line.
2) While doing so, $0 contains the value of complete line. $1, $2, $3… contain individual : delimited values. We asked : to be delimeter in arg -F:.
3) NR is a variable the contains the line number that it is currently on.
4) As we are inputting 2 files to awk, it's a little different. NR resets to 0 when we go to next file. FNR is a variable that would keep on incrementing regardless of the file it's going through.
5) Conditional check FNR == NR means that we are on the first file.

Taking example from file1, let's say we were on line

mint-value-daemon:10/GH/KL-19GA1-2020

$0 = mint-value-daemon:10/GH/KL-19GA1-2020
$1 = mint-value-daemon
$2 = 10/GH/KL-19GA1-2020

6) In this conditional statement we use split() function to split $1 by - into an array named a.

So basically this line:

split($1, a, "-")

Gives us:

a[1] = mint
a[2] = value
a[3] = daemon

We use an associative array now, named var.

var[toupper(a[1])] = $2

This stores value of $2 in at the key MINT i.e.

var["MINT"] = 10/GH/KL-19GA1-2020

Going so, it stores value of every such element in file1.

When condition FNR == NR goes false i.e. we start traversing through 2nd file, we follow a similar approach.

Remember file separator is still :, and it is not the separator in file2.

So in else:

Let's say we were on line:

MINT_SERVICE=10/GH/KL-19GA1-2020 //value2 from file1

We use:

split($0, a, "=")

Which gives us:

a[1] = MINT_SERVICE
a[2] = 10/GH/KL-19GA1-2020 //value2 from file1

Then on a[1] we again use split based on _.

split(a[1], b, "_")

This gives us:

b[1] = MINT
b[2] = SERVICE

Now:

if (var[b[1]] != "") {
    print a[1], var[b[1]]
} else {
    print
}

In array var in which we stored values when FNR == NR was true,

We check if

var["MINT"] != ""

if this holds true,

print a[1], var[b[1]] 

which prints:

MINT_SERVICE=10/GH/KL-19GA1-2020

The reason for = is the -v OFS='=' which is the separator of print.

in the else:

print

which is same as

print $0

i.e. if this value if not a key in var print it without any modification.

All this output goes to file2_new.

In the end we rename file2_new to file2.