Gather ingredients. Preheat the oven to 350 degrees F (175 degrees C). Grease a 9x13-inch baking dish with nonstick cooking spray.
Place potatoes into a large pot and cover with salted water; bring to a boil. Reduce heat to medium-low and simmer until tender, about 15 minutes. Drain and return to the pot.
Add milk, butter, salt, pepper, and garlic powder to the potatoes; mash until nearly smooth.
Stir in 1 1/2 cups Cheddar cheese, sour cream, cream cheese, 3/4 of the bacon, and 2 tablespoons of chives. Spread potato mixture in the prepared baking dish.
Bake in the preheated oven until heated through, about 20 minutes. Sprinkle remaining 1/2 cup Cheddar cheese on top; continue baking until cheese is melted, 5 to 10 minutes more. Garnish with remaining bacon and chives.