Mix the dough: whisk flour, sugar, salt, yeast. Add milk, water, melted butter. Stir until shaggy dough forms.
Knead: knead 5 to 7 minutes until smooth and elastic. Shape into a 1 inch thick rectangle. Wrap and chill 2 hours.
Make butter block: pound cold butter between parchment into an 8 by 10 inch rectangle, 1/2 inch thick. Chill 15 minutes.
Laminate: roll dough into 10 by 14 inch rectangle. Place butter in center, fold dough over to lock. Roll to 10 by 24 inch, fold in thirds. Chill 30 minutes. Repeat 2 more times. Chill 2 hours.
Shape: roll dough into 10 by 20 inch rectangle, 1/4 inch thick. Cut 8 to 12 triangles. Place chocolate at base, roll to tip, curve ends.
Rise: place on lined sheet, cover. Rise 2 to 3 hours until puffy. Preheat oven to 400 degrees F.
Bake: whisk egg with water, brush croissants. Sprinkle sugar. Bake 15 to 18 minutes until golden. Cool 5 minutes, dust if desired, serve warm.