I feed my chickens "mash" which is what you are describing. They make a bit of mess with it and there is more waste with mash than with crumbles or pellets.
I'd like to switch, actually, but my chickens won't eat the pellets (and I have yet to find more affordable crumbles). The mash is the cheapest feed I've found, although with the waste issues, I am not sure how much I am saving.
I've been researching feedstores near me, though, so I may end up switching to crumbles before I'm done. (my old feedstore ticked me off yesterday, I'm done with them - long story, I won't bore you).
Anyway, to answer your question - yes, mash is fine. But if you want less waste, you should see if they will eat the pellets or crumbles. Mine have eaten mash from the beginning - about a year or more.
My chicks didn't care for pellets when I switched over but once I was out of the crumbles, they didn't have any other choice. Took a day or two for them to figure it out. Now they eat it just like they did the crumbles.
It is less waste!! Feed is expensive and I don't want them wasting any of it. Now they don't.
I wet the powder like you told me and it swelled and now it looks like crumbles!
I love this stuff! It doubles in size when wet. To avoid waste, I am going to serve it in a 2 x 3 foot wide plastic lid for those storage containers. Instead of putting it on the ground. I got 100 pounds for what 50 pounds of crumbles would cost.
What I really like was how they attacked it. They seem to like it much more than their other food. And this is all natural and unprocessed. I got it from the Mennonites who grew it on their farm, blended it and milled it themselves!