Line two large baking sheets with parchment paper and set aside. Measure the cereal into a very large mixing bowl.
Combine white chocolate chips and coconut oil in a microwave-safe bowl. Microwave in 30-second intervals, stirring after each, until completely smooth and melted, about 90 seconds total.
Pour the melted white chocolate over the cereal and gently fold with a spatula until every piece is evenly coated. Work quickly while the chocolate is still warm and fluid.
Spread the coated cereal onto the prepared baking sheets in a single layer. Let cool at room temperature for 10-15 minutes until the chocolate coating is completely set and no longer tacky to the touch.
While the mixture cools, whisk together powdered sugar, watermelon powder, and salt in a medium bowl until the color is uniform with no streaks.
Transfer half of the cooled cereal mixture to a large ziplock bag. Add half of the powdered sugar mixture, seal the bag, and shake vigorously for 30-60 seconds until every piece is coated.
Repeat with the remaining cereal and sugar mixture in a second bag. Pour both batches onto a clean baking sheet and spread out to let any excess powder settle.
Let the puppy chow rest for 5 minutes, then transfer to a serving bowl or storage container. Shake off any excess powder before serving for the cleanest presentation.
