Temperature Loss During Batch Sparge

I batch sparge in a 5 gallon bucket which I drilled a hole and added a valve in the bottom of. I add my mash water at the strike temp, and then seal the bucket and let sit for about an hour. By the time i'm ready to mashout, the temp has dropped by about 15 degrees.
I cover my bucket with coats and blankets to try insulating it.

Is this temperature loss too big and will it significantly affect my beer?

Sparging heat loss doesn't matter much, but it sounds like what you're describing is actually heat loss during mash. 15 degrees is a lot. Are you preheating the tun?

That is quite a bit of loss. Is it a bucket or a cooler? If it's a bucket you're likely going to have to add quite a bit of insulation to the outside to stabilize the temp, or move to a cooler.

I use an actual 5 gallon bucket and not a cooler cause its cheaper so its not as insulated as I would like. The water temp should be 152F but I usually put it in at 160 to heat the bucket up. I then seal the top and wrap it in blankets. After an hour, the temp is close to 140F

As long as you're converting your starches and are happy with your extraction then you're fine, however, these types of swings in your mash temperature could have a significant affect on the fermentability of your wort. Mashing at the lower end of the range results in a more fermentable wort, meaning your beers might finish drier than you'd like.

yeah, the bucket just isnt insulated enough... no matter how many blankets you use... Those buckets are only like what... 1/8" think and a cooler is at least an inch of insulated material

Post your eff% and it will answer your own question.

Why not just go ahead and move to a cooler? It will be worth it in the long run and you won't have to worry about the temperature swings. And with a little ingenuity you can keep the cost down moving to the cooler.