Bacteria are important in the nitrogen cycle because they

The fix nitrogen into free nitrogen which is a usable form. They also bring nitrogen back into the system by decomposing dead organisms.

Answer 2. 

Because, they are known as nitrogen fixing bacteria. These organisms convert nitrogen in the soil to ammonia, which can then be taken up by plants. After nitrogen has been fixed, other bacteria convert it into nitrate, in a process known as nitrification.

Both answer is correct choose the best choice for you.
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