Preheat oven to 375 degrees F.
Put the bacon onto a baking sheet and bake until crisp about 12 minutes. Transfer the bacon to a plate lined with paper towels. Reserve 2 tablespoons of the bacon fat. Once the bacon is cool enough to handle, chop into small pieces.
Cut the chicken into bite-size pieces. In a large bowl combine the buttermilk, hot sauce, and chicken. Cover and let marinate in refrigerator for at least 2 hours or up to overnight.
In a glass baking dish, whisk together the flour, cayenne pepper, paprika, garlic powder, and salt and pepper. Remove the chicken from the buttermilk and add to the seasoned flour. Make sure all the chicken pieces are thoroughly coated. Remove the chicken from the flour mixture and put back into the buttermilk. Remove chicken from buttermilk and put back into the seasoned flour mixture for a second coating. Transfer the double coated chicken to a baking sheet and reserve.
Heat the canola oil in a large cast iron skillet to 350 degrees F. Add the reserved 2 tablespoons bacon fat. Working in batches, fry the chicken until golden brown, about 3 to 4 minutes per side. Transfer the cooked chicken to a sheet pan lined with paper towels.
In a medium bowl stir together the sour cream, mayonnaise and blue cheese. Stir in the crumbled bacon.
Serve the chicken with the Derby Dip on the side.