You are playing Nightmare mode.

When resolving the "when revealed" effect of stage 3B, no more than X resources may be spent from Bilbo Baggins's resource pool, where X is the number of players in the game.

Begin with the standard quest deck and encounter deck for the Over the Misty Mountains Grim scenario. This scenario has two encounter decks. The first encounter deck consists of Over the Misty Mountains Grim and Western Lands encounter sets, and the second consists of The Great Goblin and Misty Mountain Goblins encounter sets.

Remove the following cards, in the specified quantities, from both of the standard encounter deck:

2x Cave Entrance

2x Lone-lands

2x Dreary Hills

2x Overhanging Rock

1x Great Cavern Room

1x The Great Goblin

3x Goblin Miners

3x Goblin Axeman

Then, shuffle the encounter cards in this Nightmare Deck with the Over the Misty Mountains Grim encounter set icons into the remainder of the first encounter deck. Shuffle the cards with The Great Goblin encounter set icon into the second encounter deck.

Finally, flip this setup card over and place it next to the quest deck. Its effects remain active throughout the game, which is now ready to begin.