Prepare the Butterscotch Reduction: In a medium saucepan, pour in 1 ½ cups of butterscotch beer. Bring it to a gentle simmer over medium heat, stirring occasionally. Allow to reduce until it thickens to about ½ cup, around 20-30 minutes.

Preheat Oven: Preheat your oven to 350°F (175°C). Grease a 9x9 inch baking pan and line the bottom with parchment paper.

Mix Dry Ingredients: In a mixing bowl, whisk together 2 cups of all-purpose flour, 1 teaspoon of baking powder, ½ teaspoon of baking soda, and a pinch of salt.

Cream Butter and Sugars: Beat together ½ cup of softened unsalted butter, ½ cup of light brown sugar, and ½ cup of granulated white sugar until fluffy and pale.

Incorporate Wet Ingredients: Add in 2 room temperature eggs, 1 tablespoon of vanilla bean paste, and 1 teaspoon of butter extract. Mix in the cooled butterscotch reduction and ½ cup of melted butterscotch chips.

Combine Dry and Wet Mixtures: Gradually fold in the dry mixture to the wet ingredients, alternating with 1 cup of buttermilk.

Bake: Pour the batter into the prepared baking pan and bake for 27-31 minutes until a toothpick comes out clean or with a few moist crumbs.

Make Butterbeer Buttercream: Whip 1 cup of softened unsalted butter until fluffy. Gradually mix in ½ cup of melted butterscotch chips and 3-4 cups of powdered sugar until creamy.

Prepare Butterscotch Sauce: In a microwave-safe bowl, combine 1 cup of butterscotch chips and ½ cup of heavy cream. Microwave in 30-second intervals until melted. Stir in 1 tablespoon of honey.

Decorate the Cake: Once cooled, frost the top with butterbeer buttercream, drizzle with butterscotch sauce, and add extra butterscotch chips if desired.