Talk to anyone who has ever run a datacenter. The heat output of a machine is exactly equal to the amount of energy consumed. Maybe a watt or two leaves the room as electrical energy on a network cable, as sound energy, or as EM radiation.
Where else does the energy go?
Look at this as a freshmen year physics thermodynamics problem. Your system of interest is the computer case. It has 500 Watts coming in. It has 0.5 watts leaving as EM radiation, 0.5 watts leaving as sound (i.e., vibrations in the air), and 1 Watt leaving on wires connected to it. The other 498 Watts are necessarily heat.