Place the water and sugar in a medium saucepan, stirring until the sugar dissolves and bring it to a boil. Add the chocolate, cocoa powder, cinnamon, nutmeg, and chili, stirring with a whisk and gently bring it to a simmer for 1 minute.
Take off the heat and allow it to infuse for 10 minutes, and strain to remove the chili and the cinnamon stick. Whip the hot chocolate in a blender.
Serve immediately in large cups, or pour into a container to cool. Hot chocolate can be made up to 2 days ahead and kept tightly covered in the refrigerator.
To reheat the chilled chocolate, pour it into a medium saucepan, set the pan over low heat, and bring it to a slow boil. Remove the pan from the heat, whip the chocolate for a minute in a blender