In a microwave-safe bowl, melt butter, peanut butter, and chocolate chips in the microwave, stirring occasionally.
Measure cereal into a large bowl that has a lid, alternating with the chocolate mixture. Mix with a spoon until cereal pieces are well-coated. Add 3 cups of powdered sugar, secure lid to the bowl, and shake well. Add more sugar as needed until all pieces are well-coated with sugar!