Heat together the water, butter and milk until the butter has melted.
In a separate bowl (or the bowl of a stand mixer), mix together the flour, caster sugar, salt and yeast.
Pour the warm butter mixture into the flour and add the egg.
Stir to combine and knead for 5-8 minutes until the dough is smooth and soft. If the dough is sticky, add a little more flour.
Place in a clean bowl and cover with a damp tea towel. Allow to rise for 1 hour
Roll out the dough and cut out "holes" (circles). Cover with a damp tea towel and allow to rise while you heat the oil. Fry until golden brown and cooked through.
To make the ganache, melt together the chocolate, cream and espresso in a double boiler until smooth.
Remove from the oil and drain on kitchen paper before covering in cinnamon sugar.
Serve the doughnuts with the ganache for dipping.
Notes
I often just make doughnut holes out of the holes I cut from regular doughnuts but feel free to use the entire amount of dough for doughnut holes.