Bluetooth controller causing performance drops

I experienced random performance drops twice (Viridian Wildwood and Expedition). Standing around or moving in the maps and in my hideout, my FPS would be around 30-40fps idling with ~1000ms input lag. If I moved, the input lag would slowly increase. I've had input lag as high as 3000ms due to this issue. In-game graph shows CPU frequently spiking from 4ms to 50ms delay and no changes from network.

I have identified that this problem is being caused by interacting with a bluetooth controller (official Xbox wireless). I only ever started encountering this problem while playing with a controller. If I login with WASD controls after the problem has started, there would be no issues. While still logged in with WASD, if I interact with the controller like moving the joystick or pressing buttons, the performance would tank. It persists a few seconds afterwards, then returns to normal while I move around with WASD.

EDIT: I am suspecting it is an issue with either the controller or bluetooth or windows degradation. Something combining to cause only the game to terribly lag while also distorting computer audio (it affects audio from a youtube video) yet my CPU usage is not near 100%.

My input delay has been isolated down to bluetooth issues which drags my whole PC down. When I experience input delay in-game, I can also see the performance degradation in the Windows built-in controller tester that shows what buttons you press and the joystick. All input from bluetooth is delayed.

The input delay does not happen when switching to wired controller (bluetooth turned off) or changing to WASD. However, when I switch from wired back to bluetooth in the same game session, sometimes the lag will reappear and sometimes it will go away for a while.

This problem only ever occurs in this game in this patch v0.3. Having only played one other game extensively on bluetooth controller after first noticing this issue about 2 weeks ago, this problem never happened. Only PoE2 was causing this problem to manifest. I speculate it occurs when the game normally has performance drops (delirium fog + lots of explosions). It started with frame drops from v0.3 performance that many have reported. If the frame drops persist for a while (like estimated 2-4 minutes from rushing delirium kills), near the middle or end of delirium, my input delay has increased to 1000ms and the frames have tanked to 30-40fps while idling.

Related to this, wired controller has worse performance than keyboard.

Switching from bluetooth to wired fixed the input delay issue, but does not fix the performance degradation. I ran 10 rooms trial of chaos and my fps was degrading down to 40fps by room 8. This never goes away while using a wired controller. After finishing the trial, I still had degraded fps. I logged out to swap to WASD and my fps was a normal 60fps. Logging out again and switching to wired controller, my fps degrade back to 40fps.

So simply have a controller input causes performance drops.

One final testing, played through 10 rooms trial of chaos only on keyboard WASD. Everything was normal. There was nothing similar to the performance drops on controller. The CPU and GPU delay were flatline for basically all the playtime hovering around 4-6ms.

Comparatively, CPU delay on controller kept fluctuating up to 100ms while frames were dropping while moving between rooms, going as low as 8fps.