Whip Cheddar cheese and softened butter together in a large bowl using an electric hand mixer until smooth. Beat 1/2 cup flour into the cheese mixture at a time, ensuring each addition is incorporated fully before adding the next. Add cayenne pepper, garlic powder, salt, and hot pepper sauce; beat to incorporate.
Use a wooden spoon to fold the cereal into the cheese mixture; shape into 1-inch balls and arrange onto a baking sheet. Use the back of a spoon to flatten the balls slightly.
Bake in preheated oven until set but not yet browning, 15 to 20 minutes. Let crackers cool on pans for 1 minute before transferring to a wire cooling rack to cool completely.
2 cups shredded extra-sharp Cheddar cheese
1 cup unsalted butter, melted
1 1/2 cups all-purpose flour
1/2 teaspoon cayenne pepper, or to taste
1/2 teaspoon garlic powder, or to taste
1/2 teaspoon salt
3 dashes hot pepper sauce (such as Tabasco®), or more to taste