Line an 8x8-inch square baking pan with parchment paper, leaving some overhang on the sides. This will make it easier to remove the fudge later.
In a microwave-safe bowl, melt the butter and Velveeta cheese together in 30-second intervals, stirring after each interval, until they are completely melted and smooth. This may take 1-2 minutes, depending on your microwave's power. Be sure to stir well to combine the butter and cheese.
Stir in the vanilla extract to the melted butter and Velveeta mixture. In a separate bowl, sift together the powdered sugar and cocoa powder to remove any lumps.
Gradually add the dry ingredients to the melted cheese mixture, stirring continuously until everything is combined. The mixture will be thick and slightly crumbly at this stage.
If you're using nuts, fold them into the fudge mixture until evenly distributed. Transfer the fudge mixture to the prepared baking pan. Use a spatula or plastic wrap and your hands to press it evenly into the pan.
Refrigerate the fudge for 1 - 2 hours or until it's firm and set. Once the fudge has set, use the parchment paper overhangs to lift it out of the pan. Place it on a cutting board and use a sharp knife to cut it into small squares or rectangles.
Your cheese fudge is ready to be served. Store any leftover fudge in an airtight container wrapped in plastic wrap individually too on the countertop for best results.