Feeling lost at the beginning of a PhD is not as uncommon as one may think. I would advise you to keep going and worry less, but you're talking about anxiety overpowering you, lack of sleep and breakdowns, so it might be that burnout is the actual issue. I don't know what these breakdowns are, but since you mentioned them, I think it would help you to talk to a therapist who can tell you if what you're experiencing is more than just burnout.
Assuming is not bad enough that you need to quit graduate school, the first thing you should do is take minimum one week long break, far from computers and books, and as close as possible to people (the nice and quiet kind) and nature.
You should also try to fix your sleep patterns. It's easier said than done, but, if you implement some rules of sleep hygiene, it should work. For instance, decide upon your ideal wake up hour and stick with it for a few weeks. The hour you go to sleep could be adjusted such that you feel fully rested the next day. You should also make sure you don't touch your electronics half an hour before going to bed and you should install some software to adjust your screen colors according to the time of the day.
Also you should avoid consuming alcohol or taking any kind of recreational drugs, because these are known to affect the health of your brain.
Another thing you could do is to start setting aside the time to do things that make you happy. Go out with friends, practice sports, see new places, etc. But, in my case, these only increase my anxiety if I have deadlines and work needs to get done. What I do when I have a deadline I can't meet is I simply tell whoever is waiting for me I can't finish the work on time and either ask for an extension, or tell them I won't finish at all because of good personal reasons, such as the ones you describe.
If you get to talk to a professional and they believe your mental health is really bad, it's a really good idea to take a longer break. I don't know where you are based, but in some places you could freeze your PhD for a while, until the issues are resolved. In some places, where PhD students have some worker's rights, you could even go on medical leave. There isn't much of a point in hopping to another job, if you don't really want to leave the PhD. Also, worrying about the esthetics of your CV, at this stage, is not justified. Once you have your PhD diploma, no one will care that you needed to take a few weeks/months break to heal your brain sometimes during the PhD.
Related to anxiety, what I do to manage it, when I have a stressful project with a tight deadline and many unmanageable unknowns, is plan for the worst possible outcome. I also try to estimate the time I need to complete my tasks and break those down to clarify if the project can be done at all. I also include the warm up phases when my mind has to switch modes for tasks that are too different from each other. If the time needed for something I have to do exceeds the 40 hour week limit, I take into account refusing the tasks.
Reading papers anxiety is also common among students and postdocs. I have it myself. There are plenty ways to read papers to get most of them, but the best is to read them as needed for the project you work on. In other words, if you don't feel like learning a lot from a paper, it's better to abandon reading it. You can always return to it later when something written there turns out to be directly useful in your work. In other words, you should spend time only trying to figure out what the paper overall message is, and only commit more time to it if you find a clear use for what's in it.
