This is a trimmed chestnut. They grow a material similar to a nail or horse hoof - ergots are similar, but in a different location. When they get big you just peel or clip it off. They can smell a bit strong when you trim them, but hooves smell worse when the farrier comes out!
I usually don’t have a nice fine ground coffee on hand. Cocoa powder works just as well! Gives a nice earthy depth to the chili!