Uploading screenshot to aws

Yes it will. I would recommend not using proxy for the upload.

I am extracting base64 images from website and then storing it by uploading it to s3 bucket. Instead of transfering base64 images can I create a hash string of base64 image which will reduce character size which by default will help in saving proxy bandwidth?

It will save traffic but you cannot revert hash back so it won't be an image anymore 🙂