Make the Potato Filling:
Cook the diced potatoes in a large pot of boiling water until fork-tender. Drain and place in a large bowl.
While the potatoes are cooking, melt 1/2 cup butter in a skillet and sauté the minced onion until soft, about 5-6 minutes. Add the butter and onions to the bowl with the potatoes.
Add the shredded sharp cheddar cheese to the potato mixture. Mash everything together until the cheese is melted and fully combined. Season with salt and pepper to taste. Let the potato filling cool.
Prepare the Dough:
In a large bowl, whisk together the flour, salt, and baking powder.
In a separate bowl, whisk the egg and olive oil together, then pour into the flour mixture. Stir to combine.
Gradually add the warm water, 1 cup at a time, mixing with your hands until a dough forms. The dough will be sticky at first but will become smooth and elastic after kneading for 2-3 minutes.
Roll and Cut the Dough:
Divide the dough into two balls. On a floured surface, roll out one ball of dough to 1/4″ thickness.
Use a 3-inch cookie cutter (or a glass) to cut out circles of dough, placing them on a clean dish towel. Re-roll the dough scraps as needed. Repeat the process with the second ball of dough. You should have around 24 dough circles.
Assemble the Pierogi:
Slightly stretch one dough circle and place a spoonful of the cheesy potato filling in the center.
Fold the dough in half, like a taco, and pinch the edges together to seal.
Press along the edges with a fork or the back of a spoon to ensure they are tightly sealed and create a decorative scalloped edge.
Repeat the process for all of the dough circles.
Cook the Pierogi:
Bring a large pot of salted water to a boil. Drop 6 pierogi at a time into the boiling water.
Cook until the pierogi float to the top, about 5 minutes. Use a slotted spoon to remove them and transfer to a kitchen towel, covering them with another towel to prevent drying.
Fry the Pierogi:
In a large skillet, melt 2 tablespoons of butter over medium heat. Fry the pierogi in batches, cooking for 2-3 minutes on the first side and 1-2 minutes on the second side, until golden brown.
Add more butter as needed between batches and wipe out the skillet if necessary to ensure proper browning.
Serving:
Serve the pierogi warm with melted butter drizzled on top, sour cream, and chopped chives for garnish.