In a large heavy-bottomed pot or Dutch oven over medium heat, cook the bacon pieces, stirring occasionally, until deeply crispy and browned, about 8–10 minutes. Use a slotted spoon to transfer the bacon to a paper towel-lined plate, leaving the rendered fat in the pot. Set crispy bacon aside for topping.

Add the butter to the bacon fat in the pot and melt over medium heat. Add the diced onion and cook, stirring frequently, until softened and translucent, about 5 minutes. Add the minced garlic and cook for 1 minute more until fragrant.

Sprinkle the flour over the onion and garlic mixture. Stir constantly for 1–2 minutes to cook out the raw flour taste and form a smooth roux.

Gradually pour in the chicken broth while whisking constantly to prevent lumps, followed by the whole milk. Bring to a gentle simmer.

Add the cubed russet potatoes, salt, black pepper, and smoked paprika. Stir to combine. Bring back to a simmer, then reduce heat to medium-low. Cover and cook for 18–22 minutes, stirring occasionally, until the potatoes are completely fork-tender.

Use a potato masher or the back of a large spoon to partially mash approximately half of the potatoes directly in the pot. This creates a thick, creamy base while keeping satisfying chunks throughout.

Remove the pot from heat. Stir in the sour cream and 1.5 cups of freshly grated cheddar cheese until fully melted and incorporated. Taste and adjust seasoning with additional salt and pepper as needed.

Ladle the soup into bowls and top generously with crispy bacon pieces, shredded cheddar cheese, a dollop of sour cream, and plenty of fresh chives. Serve immediately with crusty bread or dinner rolls for dipping.