In a large mixing bowl, add the raw peanuts, sugar, and cayenne. Mix well and set aside.
Using a stovetop(or microwave) melt the butter on low/medium heat. Stir in water until butter is fully diluted. Immediately pour over peanuts and stir so all peanuts are coated.
Line your air fryer basket with a sheet of foil and cooking spray. Pour in peanuts and flatten into a single layer using a wooden spoon. Air fry at 300° for 5 minutes. remove basket and break up any chunks with the wooden spoon. Stir and shake, then re-insert into air fryer.