So the HnH world is pretty large. As a result people have the option to avoid each other, except for a few key high q nodes and meteorites. These drive pvp conflict. Otherwise, players have to decide to besiege each other's base, which is a very costly and time-consuming endeavor. And if successful, may cause one town to quit playing.
However, the world is actually a humongous large place when you consider there are 8 underground levels. There are 9 underground layers/levels, so that means the actual size of the world is actually 10 times as large.
The risk of randomly encountering another person underground is way way smaller than on the surface. As a result, mining operation are kinda like opening your own pocket universes. While there is a cave system, most of the underground has to be mined out to actually connect up and make the underground traversal. Since this consumes a huge amount of metal for mining supports, as well as being labour intensive. This isn't done. And if it were done, it would just produce a vast largely empty maze system.
To drive conflict and pvp action, consider the following change: make the underground shrink by say 10 to 20 percent for every level you decent. This means that for every level you descent, you automatically get closer to your neighbours. And eventually this can bring you into contact or conflict. With this change at 20%, level 9 would be 1/5th the size of the surface world. And lore-wise it would also make some sense, since you are all digging towards the core of the planet, assuming the HnH world is a sphere. One can play around with the actual math, but I think doing it percentage-wise/exponential decrease in size would be the best option. There's alternatives by making the change kick in only at layer 2, or making layer 9 a dungeon (or adding a new layer 10 that is a dungeon that is actually quite small).
The devs would need some math to map each layer onto the one below, as it is no longer 1 to 1, but since mining holes and cave entrances are the only things that exist on both levels, it shouldn't be too challenging to code. Furthermore, making the world much smaller by removing a huge part of the underground void may be a server performance benefit.
Additionally, it would make anything that spawns on deeper mining levels somewhat more scarce.
If the lower layer gets too small and this makes it so that whoever gets there first gets all the rewards, then making things respawn could be a solution.