If you have the hardware/cables available, please test this on your setup. Try a different monitor(s) and/or try different cabling options (both type and/or manufacturer)
Whereas I was getting dropouts consistently, they have stopped for 48 hrs after sending back a new Dell 27 inch monitor with a USB Type-C connection. I now have the Mac Mini M1 connected to my wife's setup with two display connections: 1) HDMI- A Dell 27 inch at 2560 x 1440, 2) USB-C port but using the USB-C Digital AV Multiport Adapter to connect to HDMI through a 2nd Dell 27 inch at 2560 x 1440. Image of connections is included below.
I do not know why it is working. The monitor I sent back is the same as the two monitors that I am currently using, but was the Dell with a direct USB-C connection. I was using the USB-C cable that came with the monitor and sent that back as well.
Since I made the change to two HDMI displays, I have had no dropouts while using (in multiple configurations):
- Magic Mouse 2
- Magic Keyboard without Numeric Keypad
- Logitech MX Anywhere 2S Mouse
- HP Wireless Keyboard
- AirPods (first edition)
- Powerbeats Pro (original black)
- JBL Charge (wireless bluetooth speaker)
- HP USB-C dock (both connected to Mini and without for connecting directly to Ethernet)
- Apple TV 4K
I have also placed an 11 inch iPad Pro 2018 without cellular, an iPhone 8, and an iPhone 12 Mini next to the Mac Mini and next to the bluetooth accessories. No matter what I throw at it, I cannot disrupt the Bluetooth connections. This is in comparison to 5-10 disconnections/reconnections every 10 minutes.
I also tested placing the USB-C dongle HDMI monitor connection in the other USB-C port. No dropouts.
Things that I tried that did NOT work prior to sending back monitor
Resetting the PRAM and the bluetooth module, multiple restarts and changing the position/location of my setup. I also tried turning off the WiFi and using a direct Ethernet connection using an HP USB-C dock