Kubernetes ingress 502 bad gateway on DigitalOcean

{"message":"Application is running on: http://127.0.0.1:3001"}

There's your problem; just like with any server, if you only bind to localhost, nothing except that one "machine" can access that port.

You will want

data:
  SERVER_IP: 0.0.0.0
  SERVER_PORT: '3001'