“Spirit” was a common euphemism for an erection that came from the phrase “to raise a spirit.” “Spirit” can also mean one’s soul, figuratively meaning he has wasted his soul by enacting this sin. Here, the speaker introduces the spiritual crisis that he will explore throughout the poem using sexual metaphors.
As the scholar Stephen Booth points out, “bloody” works as a pun here. Figuratively, it connotes violence and lack of reason. Literally, it refers to the speaker’s erection.