Well it wouldn’t make a very good diamond, but theoretically:
A diamond is a lattice of carbon atoms. If it has impurities (ie, non-carbon atoms) then it will take on a colour other than perfectly clear.
Peanut butter is primarily carbon atoms, it’s just carbon atoms arranged into various types of organic molecule, like fats, proteins and sugars, instead of arranged into a crystal lattice. To turn the carbon in peanut butter into a diamond, all you need to do is heat it up a bit (a few thousand degrees is plenty) to make the organic carbon molecules decay into raw carbon, then squeeze the carbon really really hard. With enough time, the pressure will force the carbon atoms to arrange themselves into a diamond lattice.
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