I made a huge technical mistake in an arXiv paper... How bad is it?
Mistakes are "bad" in academia if you fail to disclose them once you know about them (which constitutes unethical behavior), or if they affect something that counts towards a formal credential (like a degree; which is unlikely for an arXiv submission).

So, the way forward is:


Inform your co-authors (if there were any).
Upload an updated version of your paper to arXiv, in which you place a big notice at the top stating that there is a major technical error and the contents of the paper should not be considered accurate.
Then withdraw the submission from arXiv with an appropriate notice as to the nature of the error.


Then, if you think you can correct the error and rescue the rest of the paper, get to work on that.

Academics make mistakes all the time. Acknowledge your error, disclose it, and move on.