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As far as I understand, the wire shielding is for noise control.

Question

I cut a USB wire in half and am going to apply a 2 pin JST connector to the power & ground. Do I cut the wire shield back out of the way or should it connect in with the ground?

Bonus Question

I recently saw a 5 wire cable with 6 pins at the end so I assume the last wire is the shielding. Is this a common approach? The device was a Microsoft Kinect 360 (v1)

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Yeah, it depends on the application and if your device(s) are in a high noise environment (machinery,high switching noise from components, etc.). Also, are you sending data down this USB line?

But to answer your main question, this shield would normally go to a chassis ground, on both ends. If connected to another ground, it would cause a ground loop which, in practice, aren't ideal. These can be hazardous in some situations. Eliminate multiple grounds when possible.

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  • \$\begingroup\$ rane.com/note151.html Explains some of the common practices. \$\endgroup\$ – BenH Jul 7 '16 at 17:28
  • \$\begingroup\$ Interesting. I'm only sending power + ground, no data. If I leave the shield disconnected where I cut the wire will that render it useless? \$\endgroup\$ – Jacksonkr Jul 7 '16 at 18:33
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    \$\begingroup\$ If it's for something that's a hobby project, I wouldn't worry about connecting/securing it. For my personal projects where I just need to power something, not having it connected won't harm anything. If you plan to use it out in the field, it's good to connect that shield to a chassis ground as mentioned before. \$\endgroup\$ – BenH Jul 7 '16 at 19:05

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