Worm bedding is usually some form of cellulose, the substance that makes up plant cell walls. The best bedding is light and fluffy, allowing air exchange through the depth of the worm bin. The choice is up to you, depending on cost, availability and convenience. Bedding needs to have high absorbency, good bulking potential and low nitrogen content as the breakdown of excess high nitrogen materials, already present in the bin in the form of food scraps, may overheat the bin and threaten the worms' survival.
Shredded corrugated cardboard makes "one of the best beddings" for home vermicomposting systems, notes Mary Appelhof, author of "Worms Eat My Garbage." You can purchase this material in wholesale quantities from a company that shreds scrap cardboard. To create a free alternative that approximates the purchased bedding, soak scrap or pizza boxes in warm water and tear the cardboard into strips about 2 inches wide. The advantages of cardboard are that it is clean and the worms convert it into good castings; the disadvantages are that it may dry out on its top and edges.
For farm applications, aged horse manure makes the ideal bedding. It features good absorbency, good bulking potential and an acceptably low nitrogen content. The high rating for horse manure is unsurprising given that red wigglers can sometimes be collected from horse pats at stables and farms, which they make a beeline toward, giving them the nickname manure worms. The addition of peat moss or shredded paper or cardboard makes horse manure even better, increasing its carbon-to-nitrogen ratio to a more favorable value.
Peat moss also makes a good bedding. It features good absorbency and medium-good bulking potential. Canadian peat moss is a standard bedding among some commercial growers, with superior water retention characteristics but almost no nutrients for the worms. Leach it for several hours in water and squeeze out the excess to lessen its acidity before exposing your worms to it. The drawbacks to peat moss are that it must be mixed with other bedding at a ratio of a half to a third.