Place half the peanuts in the blender with 250ml (8fl oz / 1cup) water and process into a coarse paste. Transfer to a large bowl and set aside.
Repeat to blend the remaining peanuts with another 250ml (8fl oz / 1cup) water, but process until fine. Transfer to the bowl and mix well.
Place the ingredients for the spice paste in the blender and process until fine. Set aside.
Heat the oil in a heavy-bottom pot over medium heat. Add the spice paste and fry for about 15 minutes. Add the blended peanuts and 250ml (8fl oz / 1cup) water to the pot and stir. This will make the sauce slightly runny.
Turn down the heat and continue cooking the peanut sauce until the oil separates. This will take 45 minutes to an hour.
Add the palm sugar, salt and tamarind juice. Mix well, then taste and adjust the seasoning, if needed. Let it simmer for another 10 minutes before removing from the heat.
Serve the sauce with satay and sides of cucumber and onions.