How can i keep this white fuzz from growing on my hermit crabs sand?

try spaying it with a misting bottle

There are two problem algae to watch out for during this period and during regular maintenance. Cyanobacteria is readily recognizable. It coats the substrate and furnishings in an ugly layer in a variety of colors from blue-green to red to black, hence its more common name, slime algae. Fortunately it is easily removed. Simply start a siphon with a narrow, flexible tube and suck it right off the substrate. Replace the waste water with newly mixed saltwater. Slime algae are not only ugly, but they can smother other beneficial organisms blocking light and nutrients. The other problem algae are filamentous or hair algae. This looks like green fuzz growing on the rocks and is very difficult to remove once it has a foothold. At the first sign, initiate weekly water changes of two gallons. Start adding algavores (see livestock selection below) to attack the hair algae already in place. In the worst-case scenario, the rocks may have to be removed and scrubbed with a stiff-bristle brush dedicated to this purpose. Hair algae are not particularly dangerous to the reef organisms but it looks bad and prevents other beneficial organisms like coralline algae from growing.

clean and rinse out the sand or replace it with new sand.

Well, deffinently replace the sand. Are you replacing the food EVERY day? Because if you don't, it will begin to rot. My hermit crab's food did that when I didn't change it everyday. It might be pieces of your hermit crabs sponge, though. When I would forget to put more water in my hermit crab's sponge, it would tear it up. Is your hermit crab's sponge getting smaller? Then that might be it. But if you're absolutely sure it's not the sponge then it's probably the food rotting. Hope I helped.