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more than likely the diode is overheating hence dissipating the beam. I know this happens to cheapy brands when you leave them on and it stuffs them.
I use a decent quality 1mW laser which is great for personal/laser guider use. For showing people upto about 5 a 10mw is fine, bigger than that you would look at a 20-30mW problem is its generally illigal to own one over 5mW depending on the state regulations. aka Be careful.
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