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Bioaffine ligand-coated iron oxide nanoparticles have been commonly utilized to target cancer cells and have potential for application in hyperthermia for cancer treatment. Hence, it is important to gain more understanding on their heat dissipation mechanisms to better optimize them for clinical treatments. Of particular importance is to determine the effect of biofunctional coating on the heat generation rate, especially when it is formed by relatively large molecules. In this context, the heat dissipation rate of magnetite nanoparticle coated with biotin and protein A was studied by comparing their theoretical and experimental specific absorption rate (SAR). The results suggest that the experimental SAR of both samples is higher than the SAR predicted based on experimental AC magnetic susceptibility, which takes into account magnetic losses only. The increase in SAR above predictions is attributed in part to additional friction loss associated with the partial rotation of large, asymmetric clusters of magnetite nanoparticles in alternating magnetic field. This hypothesis was verified by comparing the rate of temperature increase of nanoparticles embedded in hydrogel of different stiffness.