This is normal shedding of old needles.
Take a look at your tree. Where is all the new growth?
On top.
Look at the growth on the lowest branches.
Not so much.
How much sun do those lower branches get?
Not so much. Why not?
Look at the top. It's solid vegetation. No light can penetrate down into the center of the tree.
Why does that matter? Needles are leaves. The tree's solar panels. If there is no light available, the tree has no use for them, and will sluff them off. If the lower branches cannot get light, what do you think the tree will do? Yes, the lower branches will get weaker and weaker as the tree chooses to grow the top. The "inside" of the tree will become barren of foliage as the canopy blocks the sunlight into the interior.
Our job, as bonsai artists, is to balance the tree. Remove excess growth from the top. Allow sunlight to reach the interior to keep foliage alive close to the trunk. Redirect the tree's energy to support and maintain the lower branches.
It's not just something we do when we "create" a bonsai, it's forever maintenance. We constantly have to be encouraging interior growth. Because eventually EVERY branch will grow too long and need to be cut back. There has to be interior branches to cut back to. Especially on pines.
Take another look at the underside of your tree. What do you see? A mass of twigs. See any foliage? No, it's too dark to support any. Your Mugo is "hollow".
Fortunately it's still young. It's not too late. Open it up now, and hopefully the sunlight will stimulate back budding. Wiring the branches will help expose the wood to the sunlight.
This applies to all pines. For Mugo specific advice, talk to Vance.