Mushroom compost is also known as spent mushroom substrate (SMS). It is the material mushroom farmers use as soil in which to grow mushrooms. Once they're done with it, they sell it off as organic fertilizer. But you don't have to purchase cast-offs, you can do it yourself. This gives you the opportunity to grow your own mushrooms from spores before you use the compost for fertilizer.
Know Your Manure
Manure makes up half the brown ingredients of mushroom compost with gypsum being the other half. Though it may be tempting to make do with what you've got, don't. Pig, cat, dog, human and lizard manure can host all sorts of pathogens. If they are introduced to your compost, it can become a serious health hazard to plants, animals and human beings. For that reason, horse and cow manure should only ever be used, as well as some poultry manure, if used sparingly. As poultry manure is high in lime, large amounts will burn and kill off beneficial bacteria in your compost, which would halt the intended decay process.
Sterility is Key
Unlike traditional compost, you do not want bacteria live and running around in your mushroom compost once the decay process is complete. If bacteria is still living, it can kill fungal spores before they have a chance to grow or, worse yet, result in the growth of toxic species of fungus from spores already in the compost. Once the materials have heated and decomposed, they must be placed in a specially designed steamer which kills off the bacteria before planting mushroom spores.
Watch the Salt
The secondary green ingredients in mushroom compost, such as cocoa shells, poultry litter, cottonseed meal, ground corn cobs and straw horse bedding, are all high in sodium. While this is great for farming mushrooms, it can be hazardous to your garden. So, once you're done cultivating your mushrooms and the compost is ready to be used for fertilizer, make sure to water the compost down thoroughly over a period of several days. This will help re-activate the decay process and disperse the majority of the salt.
Thin it Out
Once you're ready to use mushroom compost as fertilizer, don't overdo it. Mushroom compost is high in nitrogen and will burn your plants irreparably if you apply it directly. For that reason, mix it in a minimum of a 3:1 ratio with normal soil before using it in your garden or yard. Because of the high nitrogen content, it will have particularly good effects on any lush, leafy green species around your home.