Preheat oven to 350°F (175°C) and line a cupcake pan with liners.
Beat butter and sugar until light and fluffy.
Add egg whites, sour cream, milk, and vanilla; mix until combined.
In a separate bowl, whisk flour, baking powder, and salt. Gradually mix into the wet ingredients.
Add green food coloring and gently fold until evenly colored.
Spoon batter into cupcake liners, filling about 2/3 full. Bake for 18–20 minutes.
Let cupcakes cool completely.
For frosting, beat butter until creamy, add powdered sugar gradually, then mix in watermelon Kool-Aid and red food coloring. Pipe onto cooled cupcakes and top with mini chocolate chips.