When ready to cook, start your pellet smoker according to the grill instructions. Set the temperature to smoke setting and preheat, lid closed, for 10 minutes.
Pour 4 cups of water, 4 key lime cut in halves, and 10 mint leaves into a metal pan. Place pan on grill and smoke water for 30 minutes.
Remove water from grill by pouring water over a colander to remove mint and key lime. Pour smoked water into ice cube trays. Place in freezer until frozen.
Add tequila, lime juice, simple syrup mint, and smoked ice to a blender.
Blend until a slushy consistency and pour into glasses.
Garnish with a mint sprig and lime wedge. Enjoy!