Combine flour, paprika, garlic powder, salt & pepper in a shallow bowl. Combine eggs and water in second shallow bowl. Combine bread crumbs & macadamia nuts in third shallow bowl.
Dredge fillets in seasoned flour. Dip floured pieces in egg mixture. Coat with nut mixture, pressing the nuts onto the fish. Lay the fillets on waxed paper or plastic wrap.
Pour peanut oil into a large skillet to a depth of 1/4” – 1/2”. Heat the oil to 375 degrees. Fry the coated fish pieces for 2 to 4 minutes per side, or until golden. Cook just until fish is golden on both sides and opaque in the center – do not over-cook! Drain on paper towels. Serve hot!