Preheat the oven to 180°C. Grease 3 x 20cm round cake pans and line with baking paper.
Place butter and sugar in a stand mixer fitted with the paddle attachment. Beat on high for 5 minutes or until pale and thick. Add vanilla and then eggs, 1 at a time, beating well after each. Add half the flour and beat on low to combine. Combine cocoa and milk in a bowl, then add to stand mixer and beat to combine. Add baking powder and remaining flour, and beat to combine, then divide batter among prepared pans.
Bake for 1 hour or until a skewer inserted comes out clean. Set aside in pans to cool completely, then remove from pans and trim tops to level. When cool, brush each cake with 1/4 cup (60ml) Kahlua. Chill until ready to assemble.
For frosting, place sugar and eggwhites in a heatproof bowl set over a pan of simmering water (don’t let the bowl touch the water) and stir until sugar dissolves. Transfer to a stand mixer fitted with the whisk attachment. Whisk on high for 10 minutes or until thick, glossy and cooled.
Add butter, 1 piece at a time, whisking well after each addition. Continue to whisk until very thick, then whisk in milk powder, vanilla and 1 tsp salt until smooth.
Transfer two-thirds frosting to a separate bowl and combine with chocolate chips and cacao nibs. Place 1 cake on a cake stand. Spread with 1 1/2 cups choc chip frosting, then top with another cake. Repeat, finishing with remaining cake.
Spread plain frosting around cakes to seal in crumbs, then freeze for 10 minutes to set. Remove from freezer and spread with remaining choc chip frosting, scraping back with a palette knife to achieve a ‘naked’ effect.
For caramel, place sugar and 2 tbs water in a saucepan over medium heat. Swirl to dissolve sugar, then cook for 6-7 minutes or until golden. Remove from heat, then carefully stir in butter and cream. Set aside to cool.
Drizzle over cake, letting it drip down the sides. Cut into pieces to serve.