An ambitious plan to start WA's first urban mushroom farm using coffee grounds to grow the fungi has come to fruition, diverting three tonnes of coffee waste from landfill.

Last year, best mates Ryan Creed and Julian Mitchell saw a market for mushrooms and a cheap way to grow them, with moist coffee grounds providing the perfect soil for gourmet oyster mushrooms.

The fly-in fly-out mine workers successfully crowdfunded the $30,000 needed for their plan to cycle around Fremantle every day picking up the waste and taking it to a commercial urban farm to mix with mushroom spores.

Bib and Tucker chef Scott Bridger uses the oyster mushroom in a new dish. ( ABC News: Laura Gartry )

Over the past three months they have produced 240 kilograms of mushrooms using three tonnes of coffee grounds in a sea container in a Fremantle industrial area.

They are now selling the mushrooms back to local restaurants, while hundreds of other people are now growing their own mushrooms with their boxed home kits.

Mr Creed said the response from the public had been "phenomenal".

"We've been overwhelmed by our start and we sold out of our first crop," he said.

"We've sold roughly 400 boxes after 30 days of production so it's far exceeded our expectations, people are surprised that you can grow them on your kitchen bench."

They are now regularly supplying mushrooms to more than 10 restaurants and are beginning to branch out further.

"With our boxes we've got them online, but we're looking to get them into retail stores and eventually a national chain," Mr Mitchell said.

Coffee grounds get third life as garden fertiliser

Mr Creed said only 1 per cent of a coffee bean ended up in the cup, while the remaining grounds become a problematic waste product.

He said about 300 tonnes of coffee waste from the Fremantle area alone went to landfill each year.

The coffee waste collected for the mushroom farm is mixed with straw, which is later repurposed as garden fertiliser.

Mushroom spores incubating in a cool room. ( ABC News: Laura Gartry )

Mr Mitchell said it was hoped this little-known method of mushroom farming could help reduce the large carbon footprint agriculture can produce.

"Urban farming, such as mushroom, has very low input in terms of water use, electricity use, no chemical input. So we see things like urban mushrooms and other products coming online really decentralising how we go about growing food," he said.

The two would-be mushroom moguls set-up the social enterprise "Life Cykel" to create sustainable food and educate others about healthy living.

"We've just been able to bring on 10 schools to use the mushroom growing boxes for fundraisers as a healthier alternative to chocolate," Mr Creed said.

Fremantle restaurant Bib and Tucker's head chef Scott Bridger is using the mushrooms from his coffee waste on his new menu.

At the moment, the restaurant has two or three kilograms delivered each week for a signature dish.

"They are so delicate, so full of flavour and I think the best part is that they come from our coffee. They are grown in our coffee and delivered back to us as mushrooms, it is just winner all around," Mr Bridger said.

"We've been selling lots of it, people seeing "Fremantle oyster mushrooms" on the menu, straight away their eyes light up, it's local and different."