iMac m1 mouse not tracking

The battery may be weak or dead. Recharge the battery by plugging the mouse into the iMac with the charging cable that came with it. The iMac must be on to recharge the mouse. Optionally, you can use a USB wall charger and USB cable to recharge the mouse.

You can check the battery charge by clicking System Preferences > Mouse. The battery percentage should be displayed there.

Also try cleaning it. See the following from How to clean your Apple products - Apple Support

If your Magic Mouse or Magic Mouse 2 isn’t tracking properly, there might be a hair or other debris on the sensor lens. Turn the mouse over and inspect the sensor window using a bright light. If you see debris, use compressed air to gently clean the sensor window.