Shred 1 pound of cheese with a food processor or cheese grater. DO NOT USE PRE-SHREDDED CHEESE. IT WILL NOT MELT CORRECTLY.
In a medium pot, heat the butter over medium/high heat. Cook diced onion until translucent. Turn down heat to low.
Add the tomatoes, chiles, salt, cumin, chili powder, garlic powder, and cornstarch. Cook for about 1-2 minutes.
Slowly pour in the milk and turn the heat to medium. Bring to a simmer and stir until slightly thickened.
Add the cheese and stir until completely melted. Remove from heat. Enjoy!