Preheat your oven to 350°F. Line a standard muffin tin with green cupcake liners. This will give the cupcakes that perfect watermelon rind look!
In a large mixing bowl, combine the cake mix, vegetable oil, egg whites, and water. Using a hand or stand mixer, mix on medium speed until everything is well combined.
Add in the watermelon gelatin and vanilla extract. Mix until well blended. Then, slowly add in green food coloring, a little at a time, until you get a nice watermelon-rind green.
Scoop the batter into the cupcake liners, filling each about 2/3 of the way full. Bake for 18-20 minutes or until a toothpick inserted in the center comes out clean.
Let the cupcakes cool completely before frosting. If you try to frost warm cupcakes, the frosting will melt right off!
In a large mixing bowl or stand mixer, beat the softened butter until light and fluffy.
Mix in the vanilla extract, remaining watermelon gelatin, and ¼ cup of white sanding sugar.
Slowly add the powdered sugar, one cup at a time, mixing well after each addition. In between each cup, add a little half-and-half or milk to keep the frosting smooth and creamy.
Mix in dark pink food coloring. If you want a deeper watermelon color, add a little red food coloring too.
Prepare your piping bag with a large round frosting tip. Fill the bag with your watermelon-colored frosting.
Pipe a generous swirl of frosting onto each cooled cupcake.
Sprinkle each cupcake with a bit of the remaining white sanding sugar to give it a sparkly, watermelon-like appearance.
Top each cupcake with mini chocolate chips to resemble watermelon seeds. Adorable and delicious!