Season the chicken pieces with 1 teaspoon kosher salt and black pepper to taste.
In a shallow bowl, combine 1½ cups flour, 2 teaspoons garlic powder, 2 teaspoons sugar, ¼ teaspoon cayenne pepper, 1 teaspoon paprika, 3 teaspoons salt, and ½ teaspoon black pepper.
In a separate shallow bowl, beat together the egg and buttermilk. Whisk in the remaining ¾ cup flour, 1 teaspoon garlic powder, 1 teaspoon sugar, ½ teaspoon paprika, ¼ teaspoon cayenne pepper, ½ teaspoon salt, ¼ teaspoon black pepper, and baking soda until combined.
Add the chicken pieces to the buttermilk mixture and toss until thoroughly coated.
Place a cooling rack inside a rimmed sheet pan. Pour the frying oil into a large, heavy pot and heat it over medium-high heat to 325°F (163°C).
Working one piece at a time, lift the chicken from the wet mixture and allow the excess coating to drip off. Transfer it to the seasoned flour mixture and press the coating firmly onto the chicken.
Fry the chicken in small batches for 3–4 minutes, turning halfway through, until deep golden and crisp. The center of each piece should reach 165°F (74°C). Transfer the cooked nuggets to the cooling rack and let the oil return to 325°F before frying the next batch.
Meanwhile, melt the butter in a small saucepan over medium-low heat. Add the honey and Sriracha and whisk until smooth and completely combined.
Transfer the Hot Honey Chicken Nuggets to a serving platter. Drizzle with the warm sauce or serve it alongside the nuggets for dipping.