There whereabouts are a bit unclear. They might have dug to deep, relocated deeper into the mountain, and/or have gone extinct.
Artbook, page 36:
The Hollow Mountain is a large, open space, dug out by a now-extinct mole-like species called Mohlen. They started excavating the mountain because of a very rich and important material, which they deemed Mohlenite. It has conducting properties, making it useful for moving objects and powering their machinery inside the mountain.
Artbook, page 98: