Not as much protection as you'd think.

Try this at home - get a shovel, and try to pile "loose earth" into the shape you've described (3ft tall, 2ft deep wall). It will immediately fall down into a pile. The angle of repose of soil is 30-45 degrees. In your configuration (2ft diameter base) the pile needs to have an angle of repose of 75 degrees. So the entire thing flops over to about half its height. The soil from the sides of the hole is also falling inwards, filling up your hole, probably reducing the amount of cover from the hole by half as well. If you're unlucky, the soil from the wall will fall backwards into your hole and reduce the depth even further. It would look more like this:

|      OO

|   OOOOOOO

XXXXXXXXXXXO      XXXXXXXXXX

XXXXXXXXXXXOOO XXXXXXXXXXXXX

XXXXXXXXXXXXOXXXXXXXXXXXXXXX

If you're lucky, you'll get 3 feet of cover (partial cover) out of this. There's a reason soldiers build trenches out of packed, not loose, soil.

Advantages of the Bag of Holding:

• Removing items costs an Action, whereas with the hole you have to actually climb in to get something. Drawing an item from the bag in combat is reasonable (if expensive); from the hole, not so much

• The bag is less suspicious. Unless you draw something that obviously would not fit, a Bag of Holding just looks like a bag. A portable hole is going to look highly magical when in use.

• Needs less space. The bag is just the size of a bag; the Portable Hole requires a 6ft diameter space to open up against. Not very practical in the crowded space of a dungeon.

• Not as hard to get. The Bag of Holding is an Uncommon item, the Portable Hole is a Rare.