Touch ID stops working after display turns off from inactivity and computer goes into sleep mode

Update #2:  Well, to my surprise, the issue is indeed the display and NOT the Mini Mac automatic sleeping function.  After changing 'Turn display off when inactive' on the Lock Screen from 'Never' to 'For 1 hour', the Touch ID stopped working again after being inactive for 1 hour.  I then changed the setting 'Turn display off when inactive' from 1 hour to 10 minutes, and then after a few tests, from 10 minutes to 2 minutes. Both times, after leaving the display off for a few minutes, to insure it shuts down completely, the Touch ID stops working and will not reactivate until I either reboot the computer or turn off the keyboard for a short period, turn it back on, log in with the password, and then I can use Touch ID. 

The Touch ID will work if I immediately touch the keyboard or touch pad as soon as the display shuts off, but as soon as the message ‘No Signal – Entering the power saving mode shortly’ pops up, Touch ID becomes disabled.

So the software in the Mac that commands the display to turn off, per the timeline selected in the Lock Screen setting, somehow disables the Touch ID from working after the display gets re-activated via the keyboard or touch pad/mouse. If I want Touch ID to always work continuously, then the Lock Screen setting for 'Turn off display when inactive' must be set to 'Never'. Either that, or change the "Turn off display when inactive' to the max time available of 3 hours, and plan to turn the keyboard off, then on, every time I am away from the computer for more than 3 hours, if I want to use Touch ID – or reboot.

Update: With the display never turning off (Lock Screen page) and the Energy setting under Displays>Advanced set to prevent automatic sleeping when the display is off, Touch ID works every time after 2 days of testing. It was expected that Touch ID would work every time and of course, it does.

My guess is that the automatic sleeping function is the source of the problem. But to be sure of that, I am now changing the Lock Screen page, 'Turn display off when inactive' from 'Never' to 'For 1 hour' to see if the display itself is causing the Touch ID to be disabled when it shuts off. If Touch ID continues to work, as I expect it will, then it is definitely the automatic sleeping function causing the Touch ID to be disabled.

To be sure, I will verify by changing the Displays>Advanced page setting back and forth to prevent, then allow automatic sleeping when the display is off to verify for sure that automatic sleeping is the function that disables Touch ID.

I checked Displays>Advanced and for 'Prevent Automatic Sleeping when the Display is OFF', I have that button 'On', so it should stay awake. After I came back this afternoon after a couple hours, it takes several seconds for the Display to turn on, but as soon as it lights up, the login screen is on and says 'Touch ID or Password'. I tried Touch ID and it didn't work so I had to use the Password to log in.

I have tried both keyboards, deleting them and re-adding. I tried to remove the fingerprints and re-added them. I also entered two different finger prints. None of them solves the issue.

I am going to try Never turning the display off when inactive on the 'Lock Screen' page in settings and see if that works. I don't want that to be the long term solution because it shortens the life of the display but if that works, then I have another data point. So screen saver will kick in after 20 minutes, the display will never turn off, and I will require the password immediately after screen saver turns on.

By the way, I just turned off the keyboard, waited, turned it back on, waited for it to show connected under the Bluetooth tab, then locked the screen. Then only the 'Password' option was available to log in. After logging in, I again immediately locked the screen and then 'Touch ID and Password' came up as login options and Touch ID worked! So turning off the keyboard does re-enable Touch ID but only after you log in with password.

I am still going to try the 'Never' option so the display will never turn off. If that works, then it means something is happening with the computer when the display turns off even though the computer is not set to go to sleep.

Response to Barney-15E: Yes, the Apple Track pad is the only other bluetooth device. And it never shuts off when this happens. Since the keyboard also still works (except Touch ID) and the Track pad works, I assumed bluetooth is functioning okay and the problem occurs in the Mac Mini when either it commands the display to sleep or when it goes to sleep. Note that I do not use energy saver mode, so I don't put the hard disk to sleep when possible.

I start the screen saver 20 minutes after inactivity, I turn the display off 1 hour after inactivity, and I require a password 4 hours after the screen saver begins or the display is turned off. Question: Does turning the external display off automatically put the Mac Mini in sleep mode?

Regarding your comment, You mention you have the Mac sleep prior to the Display (Sleeping?), then you also set the Mac not to sleep when the display sleeps. So the Mac wakes up as soon as the Display sleeps? Then you say your TV shuts off when it stops getting a signal (the signal being the Mac sleeping or when you shut the Mac off?) Can you please clarify?

Response to P. Phillips: Yes, when Touch ID stops working, I have to manually enter the password.

I start the screen saver 20 minutes after inactivity, I turn the display off 1 hour after inactivity, and I require a password 4 hours after the screen saver begins or the display is turned off. Note that I do not use energy saver mode, so I don't put the hard disk to sleep when possible. Question: Does turning the external display off automatically put the Mac Mini in sleep mode?

Note I tried your recommendation this morning, that is: I switched OFF the Keyboard, paused and Turned it back ON to establish a new connection to computer vs shutdown and restart. That did not establish a new connection and I had to manually enter the password.

I always look to see what it says. When I restart, it does say Password required to enable Touch ID. But when I come back after the display has turned off, it gives both options (it says 'Touch ID or Password') but Touch ID doesn't work.

The Magic keyboard with Touch Id is wireless. I only connect with a cable when charging the keyboard and it is directly to the Mac Mini, not through the monitor.