Blend shredded coconut in a food processor. After about 5 minutes, drizzle in the coconut oil as the motor runs. Continue to blend until it’s fully smooth and creamy, stopping every few minutes to scrape down the sides (and give the motor a rest!). This will take about 12 to 20 minutes total with most machines.
When the coconut butter is ready, it will look smooth, viscous, and silky, like sweetened condensed milk. (Optional: Depending on the strength of your machine, you may not get a fully smooth, liquid butter. If that’s the case, run your coconut butter through a sieve, using a spatula to help it along. The smooth liquid that makes it through is what you should use. Save the solid bits in the sieve for later use—in frostings, granola, or anywhere you’d use shredded coconut.)
Store coconut butter in a sealed jar at room temperature—it will thicken somewhat as it sits. In order to restore its drippy texture, just warm a few tablespoons over low heat until it liquifies. (Coconut butter can be refrigerated, but solidifies around 76º F.)