Musk’s decision signifies a sharp u-turn for Tesla who only started accepting Bitcoin as payment for its services in February 2021.
It came after the electric car company bought $1.5b (£1.06b) of Bitcoin shares, which in turn sent the market price of both the crypto and Tesla soaring.
Yet the impact on the environment of Bitcoin mining - a complicated process of minting new digital tokens - has seen Tesla withdraw this option for customers.
The billionaire entrepreneur said: “We are concerned about rapidly increasing use of fossil fuel for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Musk reaffirmed his belief that cryptocurrency has a “promising future” but that it “cannot come at great cost to the environment”, in his Twitter post.