Cut 3-inch diameter oak logs into 3-foot lengths with a saw in early spring after the last frost.
Drill 1-inch deep holes, 4 inches apart in a row and 1 inch between rows all around the logs.
Purchase a plug kit from a nursery or hardware store, and lightly hammer the seeded plug into the drilled log holes. Plug kits include inoculated spawn shaped as small plugs.
Seal the holes with hot beeswax pellets or beeswax pearls to retain moisture. To do this, dispense 1 lb. of beeswax into a microwave-safe bowl, and microwave it on "High" for five to 10 minutes or until fully melted. Pour beeswax over and around the holes. Smooth with a clean spatula quickly before the melted beeswax sets.
Stack oak logs perpendicular under an evergreen tree. Water twice a week to keep the logs from drying out. In approximately nine months, spawn will germinate into a yellow or brown circular mass known as mycelia, which spreads through the cut ends of the logs. Once the mycelia are finished spreading, fruiting occurs and small projections known as pins appear. Within two to three months, the pins mature into sponge-like mushrooms caps.
Harvest sponge mushroom caps with a clean, sharp knife. Wipe mushrooms gently with a damp cloth to remove dirt and insects. Refrigerate in wax paper and use within 10 to 14 days.