Correct: H2o2 can be mixed with water (I even use it straight) and it works well against fighting contaminates.

the purpose is to kill any harmfuls contams, but won't it kill any organisms that are touching it?

Contaminates and organisims kind of go hand and hand... I think I know what you're trying to say though, so NO it won't be harmful.

By this I mean when you place damp perlite on the bottom of your terranium soaked with H202 solution, would this infact kill any life on the cakes?

It will kill harmful contaminates like cobweb mold. After I birth cakes, I give them a light misting of H2o2. I've never had any problems while using H2o2. It will not hurt or harm the mushrooms:-)

-mitch

And the great thing about hydrogen peroxide is, in the process of killing them, it just turns into water. Hydrogen peroxide is the perfect disinfectant for shrooms.

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"He who makes a beast of himself gets rid of the pain of being a man."
-Dr. Johnson
"I should play God and just shoot you myself."
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happy shrooming!