Pre-heat oven to 425℉. Place bacon on a baking sheet lined with aluminum foil - do not overlap. Bake for 15 minutes or until bacon reaches desired crispiness. Reserve 1 tablespoon of bacon grease. Chop bacon into small pieces and set aside.
Add butter, reserved bacon grease, and flour to a large pot. Set heat to medium high and stir to combine. Immediately after that, add milk and chicken broth. Stir and bring to a boil.
Add potatoes to pot then add 1/2 tsp salt. Stir to combine. Bring to a boil, then cook for 10 minutes or until potatoes are soft.
Using a potato masher or immersion blender, mash potatoes in soup briefly until they are in small chunks. They do not have to be finely mashed.
Add cheddar cheese, sour cream and bacon. Optional: reserve a few pieces of bacon as garnish. Stir soup to combine. Add salt and pepper to taste to open up the flavors.
Boil for a few more minutes then remove from heat.
Garnish with cheddar cheese, chives and bacon pieces (optional). Serve and enjoy!