In a large pot or Dutch oven, cook chopped bacon over medium heat until crispy. Remove with a slotted spoon and set aside, leaving 2 tablespoons of bacon fat in the pot for flavor.

Add butter to the pot and stir in chopped onion. Cook until translucent, about 5 minutes, then add minced garlic and sauté for an additional 30 seconds.

Sprinkle flour over the onion mixture, stirring for 1 minute. Pour in the chicken broth while whisking until you achieve a smooth consistency.

Incorporate the diced potatoes and bring the mixture to a boil. Reduce heat and simmer uncovered for 15 to 20 minutes or until the potatoes are fork-tender.

Use a potato masher to mash some of the potatoes, or use an immersion blender for a smoother texture.

Gently mix in the heavy cream and shredded sharp cheddar cheese, stirring until melted. Season with salt and pepper.

Pour the soup into warm bowls and top with crispy bacon, extra cheddar, and fresh chopped chives.