High speed steels are alloys containing various amounts of tungsten, cobalt, manganese, vanadium, chromium, and other hard metals to make tools that will cut at high rotational and feed rates while remaining sharp. Some of them retain their hardness capabilities while running dull red heat, for instance. When drilling or machining hardened or work hardening steel, it's necessary to have a tool that remains harder than the material you are working -- just like trying to sharpen a RC 62 knife with a file, which is very likely softer than the knife, not gonna work well. HSS tools do not lose their hardness at the heat generated by the friction of the drill bit spinning on hard steel, unlike carbon steel bits, which then immediately become quite dull. From the looks of the chip, it appears that the steel in the knife blade as reached at least blue temperature, and likely somewhat higher. Bye bye carbon steel drill bit!
HSS drill bits are much cheaper now than they were some years ago, and are readily available. Carbon steel (blue) bits won't drill hardened knife steel well at all, they won't keep an edge long enough to get all the way through.
Peter