I used this post, Home Assistant OS in KVM with USB Bluetooth adapter passthrough - #3 by wmaker as somewhat of a guide, and was finally able to see my onboard bt adapter from my old gaming laptop (Lenovo Legion y720) running NixOS now. I have haos configured via a VM now.
> lsusb | grep Blue
Bus 001 Device 005: ID 8087:0a2b Intel Corp. Bluetooth wireless interface
Here is the bt-device config
<hostdev mode='subsystem' type='usb' managed='yes'>
<source>
<vendor id='0x8087'/>
<product id='0x0a2b'/>
</source>
<address type='usb' bus='0' port='6'/>
</hostdev>
Note: I am able to scan for devices from my host machine
I am able to see the hardware but it does not show up as a bluetooth device on my home-assistant
Looking at dmesg, i get the following lines for bluetooth
[ 5.182857] Bluetooth: Core ver 2.22
[ 5.182880] Bluetooth: HCI device and connection manager initialized
[ 5.182884] Bluetooth: HCI socket layer initialized
[ 5.182886] Bluetooth: L2CAP socket layer initialized
[ 5.182892] Bluetooth: SCO socket layer initialized
[ 5.867760] Bluetooth: hci0: Bootloader revision 0.0 build 26 week 38 2015
[ 5.868770] Bluetooth: hci0: Device revision is 16
[ 5.868775] Bluetooth: hci0: Secure boot is enabled
[ 5.868776] Bluetooth: hci0: OTP lock is enabled
[ 5.868778] Bluetooth: hci0: API lock is enabled
[ 5.868779] Bluetooth: hci0: Debug lock is disabled
[ 5.868781] Bluetooth: hci0: Minimum firmware build 1 week 10 2014
[ 5.877543] Bluetooth: hci0: Found device firmware: intel/ibt-12-16.sfi
[ 6.442742] Bluetooth: BNEP (Ethernet Emulation) ver 1.3
[ 6.442748] Bluetooth: BNEP socket layer initialized
[ 7.369880] Bluetooth: hci0: Waiting for firmware download to complete
[ 7.370758] Bluetooth: hci0: Firmware loaded in 1458213 usecs
[ 7.370861] Bluetooth: hci0: Waiting for device to boot
[ 7.383795] Bluetooth: hci0: Device booted in 12708 usecs
[ 7.384095] Bluetooth: hci0: Found Intel DDC parameters: intel/ibt-12-16.ddc
[ 7.386803] Bluetooth: hci0: Applying Intel DDC parameters completed
[ 7.387805] Bluetooth: hci0: Firmware revision 0.1 build 19 week 44 2021
[ 7.389805] Bluetooth: hci0: Reading supported features failed (-16)
[ 7.389835] Bluetooth: hci0: Error reading debug features
[ 7.389839] Bluetooth: hci0: HCI LE Coded PHY feature bit is set, but its usage is not supported.
[ 7.441011] Bluetooth: MGMT ver 1.23
[10879.812288] Bluetooth: hci0: Firmware revision 0.1 build 19 week 44 2021
[10879.815233] Bluetooth: hci0: Reading supported features failed (-16)
[10879.815324] Bluetooth: hci0: Error reading debug features
[10879.815363] Bluetooth: hci0: HCI LE Coded PHY feature bit is set, but its usage is not supported.