While this soup was originally created to make use of leftover mashed potatoes, it is so beloved you may find yourself making mashed potatoes just to have the soup!
Heat a 5-quart saucepan over medium and cook bacon until crisp, remove slotted spoon and transfer to a plate covered with paper towel; drain.
Return the saucepan to the stove. Add the butter and stir until melted. Stir in the flour and cook, stirring constantly, 1 minute. Slowly whisk in the milk and cook until slightly thickened, about 6-7 minutes. Stir in the potatoes and cheese and cook until hot and smooth, about 1-2 minutes. Remove from the heat and stir in the sour cream, salt and pepper.
Divide the soup among 4 bowls and top each with bacon and chives.