In large saucepot over medium heat, add bacon and cook, stirring frequently, until well browned. Transfer to paper towel-lined plate and reserve, leaving bacon fat in saucepot.
Add onions, cover and cook until soft and translucent, about 7 minutes.
Add potato cubes and cayenne pepper; sprinkle with coarse salt and pepper. Add 1½ cups chicken broth; bring to boil. Reduce heat to medium and simmer until potatoes are still firm but not raw, adding more chicken broth if dry (mixture should be creamy with some sauce, not dry), about 8 minutes.
Add cream and simmer until potatoes are tender but still hold their shape, stirring often, about 10 minutes. Stir in cheese and chives.