The issue is resolved now with latest update 12.1
MichaelAUDU
Users receive reputation points by contributing quality content to the forums.
Posts include post and replies published on the forums.
Post authors can mark replies as Accepted to indicate successful solutions.
Apple Developer Forums admins can mark replies as Apple Recommended to indicate an approved solution
From
Australia
Post
Replies
Boosts
Views
Activity
My Magic Mouse also stops after sleep and my Touch ID on my wireless keyboard stops too. Only way to fix is turn off and on the mouse and keyboard. I'm using M1 MacBook Air.