Preheat the oven to 350°F and prepare two 8 inch round cake pans. Spray the inside with cooking spray, then cut round pieces of parchment paper so that they fit in the bottom of each pan (do not skip the parchment paper lining!) Whisk flour, cocoa powder, sugar, salt, baking powder, baking soda together in a large bowl.
Add in the eggs, coconut extract, vanilla, oil, and milk. Pour in the hot water and mix until smooth.
Divide the batter evenly between the two cake pans and bake on the middle rack of the oven for 20-26 minutes or until a toothpick inserted in the middle of the cakes comes out clean.
Let the cakes cool in the pans for 20 minutes, then run a butter knife around the outside of the cake to loosen it from the pan and flip upside down onto a cooling rack to cool completely.
Make the buttercream. In the bowl of a standing mixer or handheld mixer, beat butter, coconut extract, salt, and ½ cup of icing sugar. Slowly add in ½ cup of powdered sugar at a time until it reaches your desired consistency. If the buttercream is too thick, you can add ½ tablespoon of milk in at a time, thinning it out as much as you'd like. If buttercream is too thin, add in more powdered sugar ¼ cup at a time.
Once the cakes have cooled completely, add the frosting. Cover the cake in buttercream, then sprinkle the coconut on top and on the sides. For the sides, you can use your hands to gently press the shredded coconut into the cake. The cake should be generously coated in coconut.
Slice and enjoy!