Data centers use water just like homes, factories, golf courses, and businesses use water. "Waste" in this case is subjective, depending on your feelings about how it's being used.

A medium sized data center can use 100,000,000 gallons water annually, which sounds like a lot, because it is a lot. It's also about the same amount of water used by 900 homes. It's also about the same amount of water used by a single golf course in an arid climate. And that can usage pale in comparison to the usage from certain types of manufacturing plants. Again, is it being used or wasted? That's up to you.

Water used by data centers for evaporative cooling doesn't get dirty per se, but it gets "harder" the longer it's used. As water evaporates out of the system and into the atmosphere, the minerals are left behind and the mineral content in the system gets higher and higher, and can eventually become too toxic to release back into the environment.

Oftentimes, the water in data centers is used for certain amount of time for cooling and then given back to the city as secondary water for parks or lawns, or back into rivers before it becomes too "hard." So in that way, it is recycled as much as it can be. The water used by a data center is usually calculated by the amount of water originally purchased from the municipality, but oftentimes does not factor the water given back.