It was because of the corruption and power welded by the type setters guild. Papers charged by the letter for adds, so one letter which could replace 2 was lost profits. So it had to go.

Imported types (ex. from the German states) for printing presses didn’t have it because it was an English only letter. Rather than coming up with expensive home modification (which some did anyway eventually but not en masse) there were easy alternatives because use of th was already established and also the letter y kind of looked like thorn in the fonts of the time so you could also sub that in.

Convenience of just doing a workaround rather than paying more money for a more English type modification won out and with so many using th and the thorn disappearing soon the use of the y that looked like thorn dropped out also.