This is the new step: Grind the coconut in your blender or spice grinder until fairly finely ground. (I love this coffee grinder. I think you get a better grind in this than in the blender.)
Add 1 cup of water to the ground coconut in a high powered blender (like Vitamix) and blend on high for 1 minute.
Add water to make 5 cups of coconut milk. Blend on high for 3 minutes.