I don't think it can be underground, since Musk said it would cost $6 billion to build. Also, the plan is to build something similar for east-west coast travel, and underground would be even less possible.
And I keep hearing people trying to apply Hyperloop to coast-to-coast travel, but I don't recall Elon every saying anything about that long of a distance. In fact I recall him specifically talking about "the right city pairs", which implies some kind of distance limit.
The $6 billion cost seems too good to be true for any transportation system that would require significant land acquisition. California is set to spend some $60 billion on a train between these cities, and most of that cost is for right-of-way.