In a large pot, cook the bacon until crispy. Remove and set aside.

Sauté the chopped onion in the bacon fat until soft and fragrant. Add the diced potatoes and broth. Bring to a boil, then reduce heat and let simmer until the potatoes are fork-tender.

Mash some of the potatoes directly in the pot for a thicker texture. Stir in the milk or cream, cheddar cheese, sour cream, salt, and pepper. Let the cheese melt into the soup.

Ladle into bowls and top with crispy bacon bits, chopped chives, and an extra sprinkle of cheddar if desired. Serve warm and enjoy!