The injuries occurred in a fall during Monday's training, but it was only the next day that the 35-year-old complained of "worsening neck pain."
The snowboarder, who is competing in the Olympics for the fourth time, is said to be in good spirits despite the serious injury.
Bolton is the second Australian snowboarder to be forced to withdraw from the Games, following 20-year-old Misaki Vaughan, who also had to withdraw after suffering a head injury on Monday.
Australia has not won a medal in this year's Olympics so far.
