In a large Dutch oven over medium heat, cook diced bacon until fat is rendered and bacon is crispy.

Remove bacon with a slotted spoon and drain on paper towels, reserving 2 tablespoons of bacon fat in the pot.

Add diced onion and minced jalapenos to the bacon fat; sauté for 6 minutes until vegetables are softened.

Stir in minced garlic and cook for 60 seconds until fragrant.

Pour in chicken broth, smoked paprika, salt, and black pepper; bring the mixture to a simmer.

Reduce heat to low and whisk in the cubed cream cheese until completely melted and the base is smooth.

In a small bowl, whisk cornstarch and water to create a slurry; stir the slurry and heavy cream into the soup.

Simmer for 5 minutes until the liquid has thickened to a coating consistency.

Remove the pot from heat and gradually fold in the shredded cheddar cheese until fully incorporated and smooth.

Stir in half of the cooked bacon and serve immediately garnished with remaining bacon.