For frosting, in a small bowl, dissolve coffee granules in water; set aside. In a bowl, cream butter until light and fluffy. Beat in cocoa. Gradually beat in confectioners' sugar and coffee granules until smooth.
Cut cake into three horizontal layers. Place bottom layer on a serving plate; spread with frosting. Repeat with middle cake layer. Top with remaining cake layer; frost top and sides of cake. Garnish with chocolate sprinkles if desired.