Set Instant Pot to saute. Add the sausage and cook until no longer pink. Add olive oil (only if pot is too dry) and add peppers and mushrooms and cook for an additional 2-3 minutes, or until softened. Pour contents into a strainer and allow grease to drain. Meanwhile, rinse out pot.
Return pot to pressure cooker and add 1 1/2 cups water to pot. Coat a round 6-inch pan with cooking spray. Pour the sausage mixture into the pan.
In a medium bowl, whisk the eggs, cream of mushroom soup, milk and 1/2 cup of the cheddar cheese. Pour the mixture over the sausage mixture in the pan.
Press the tater tots into the mixture, ensuring that they are fully immersed in liquid. Sprinkle the remaining 1/2 cup of cheese evenly over the top and cover pan tightly with foil. Place on trivet and lower into the Instant Pot.
Place the cover on the pot and set timer to 35 minutes on high pressure (pressure cook setting). It will take the IP around 8 minutes to build up pressure before it begins cooking.
When cooking is done, let the pressure release naturally for 5 minutes then do a quick release and allow the float valve to drop.
Carefully remove the pan from the pot by pulling up the trivet. Remove foil and let sit for 15 minutes before slicing and serving.