All economic activity emits CO2 directly or indirectly. The question is are the benefits worth the cost, and could the process be more efficient. A molecule of data center CO2 doesn't affect the climate any more than one that comes from producing cement, or getting a Labubu delivered overnight. If we want less CO2 emitted, it is best to treat emissions equally and let people decide what they value when they spend their money.

We should regulate data centers to require fully renewable power (solar/wind/hydro + battery).

This is tangential encouraged by your point and other forays here. But one does wonder what arguments politicians (the power lies with them) understand when they make their pronouncements. The UK has for instance, prior to the new administration, totally and vociferously supported net zero. From the point of view (a fact for many but not for all informed authorities) that climate change is caused by CO2 and we are headed for a disaster - Net Zero is a logical step to trying to save humanity and the whole ecosystem. Now (November) I read that the UK powers that be, appear to have put it aside in actions at least. Countdown to Net Zero doesn't matter any more; open the oil fields, get rid of subsidies for photovoltaic and wind - and other measures. My point is not a political jibe but a stance I suspect to apply in other areas. Is climate change going to be a catastrophe or not? They should make up their minds.