How do so many bicycles end up in the canals of Amsterdam?
Why do you think they aren't recycled? EU legislation is pretty strict on what can go in landfill and it would be very surprising if the bikes fished out of the canals aren't recycled (i.e., melted down and the metal used for something new). 20,000 bikes is going to be at least 200 tons of scrap metal.

After being underwater for a while, the bikes are probably sufficiently badly damaged that their parts can't be re-used: components such as bearings would probably be damaged beyond economical repair and structural components such as the frame and wheels would have corroded to an unknown amount and can't be guaranteed to be safe.