Water Heater in Crawl Space

My current electric WH is in a coat closet on the main floor of my home. I would like to replace it with a heat pump WH. I am concerned about the increased noise, and would also love to get the coat closet space back. My home is on a crawl space that goes from 3' tall on one end to to approximately 5' tall on the other end. A HPWH is about 5.5' tall. Would it be a terrible idea to dig a pit 1-1.5' down on the tall end of my crawlspace, put in some cement pavers and a plastic tray, and put the HPWH in the crawl? The benefits of moisture reduction, sound abatement, and space all push me to the crawl. But digging a hole in the ground does seem a bit...odd. Best idea or worst idea?