Lagging mouse on Mac Mini M1

I have the same issue. When I turn the wifi off the mouse runs perfectly. Shortly after I turn it back on it starts to lag again. It's not a permanent solution but I have turned off the wifi and just use the ethernet on the M1 Mac Mini. I like the unlock with Apple Watch feature but it won't work if wifi is not turned on. I'm hoping it's a software issue that can be resolved in the future but my hopes are not high. Very disappointing.

Probably something to do with bluetooth issues. I finally gave up and use logitech mouse and keyboard that connect to my mac mini via a small usb dongle (which I have plugged into a short USB extension cord so the dongle in on my desk and has an unobstructed line of sight between the dongle and the mouse and keyboard. Otherwise the signal (dongle or bluetooth from an apple wireless product) has to travel through my monitor (because my mac mini is on a shelf behind my monitor). I had disconnects and lagging with my apple wireless keyboard and mouse and finally wound up using this workaround. I would say see if the issue continues after getting the devices closer to the computer in a direct line of sight. Also, you could see if an app can check for bluetooth activity in the vicinity -- it may be that there are some signals in the area you aren't aware of. If neither of those work, try the logitech usb dongle devices, which have never failed me (unlike nearly every Bluetooth device I have ever used in my life).

Good luck!

Bluetooth can be so finicky sometimes and subject to signal issues with the very crowded 2.4Ghz band. I have had times where both my Apple keyboard and Magic Mouse 2 loose connections briefly. This does not happen too often and I have stopped trying to find the cause. I did discover when I had mounted my Mac mini behind my monitor with a VESA bracket the problems became worse. So I did suspect that particular monitor was causing signal interference. Another monitor previous never caused any of these issues so it can be an isolated problem with Bluetooth. Over the years I have had Bluetooth issues with other non-Apple products. It's just something that is a side effect of wireless.

What “all kind of suggestions”? Why search the internet for a solution? Is it a Magic 2 mouse? Why’re you shaming Apple or their community here when you haven’t given either a shot at fixing? Etc. etc. Details, please. Thank you.

My new M1 mini, earlier I had Bluetooth keyboard, wired USB mouse, whenever the other USB port is also used for either External USB drive, flash drive, the mouse going crazy and sluggish, if I use USB connector to expand number of USB to four , issue still existed, clear a bug Apple doesn't fix, I bought a Bluetooth mouse and connect mouse/keyboard ($20-$30 each)via Bluetooth and avoided the sluggish USB mouse nightmare.