using Apple Watch to unlock Mac mini M1

I have a Apple Watch S6 and Mac mini M1. Initially was able to Auto Unlock my Mac mini with my Apple Watch then over the past 2 weeks it is no longer unlocking. The Lock Screen shows "unlocking with Apple Watch" and the spinning dashes (sorry not sure what the term for it is) for about 3-5 seconds and then gives up.

So far I have tried doing the keychain delete of the Auto Unlock and Autounlock items. Deleting the Library auto unlock items, signing out and back in to iCloud. I've tried unpairing and re pairing my Apple Watch to my iPhone, but nothing has worked so far. Not sure if this is a software issue or hardware issue as it was working when I bought my Mac mini M1 a month ago. The auto unlock seems to work fine on my older iMac 27" 2014

Anyone have any other suggestions