Press the saute function in a 6 or 8 quart Instant Pot. Add bacon and cook until crispy, about 7 minutes. Shut off the saute function, remove bacon and all about 1 teaspoon of bacon grease.
Add potato, broth, salt, garlic powder, pepper, paprika and stir. Close the lid, set the pressure valve to sealing and cook on manual high pressure for 12 minutes. Use the natural release for 5 minutes, then release any remaining pressure.
Remove 2 cups of potatoes and set aside.
Using an immersion blender, blend remaining soup. Whisk in sour cream and lemon juice or dairy free alternative (see note) and whisk until completely combined.
Add the potatoes back to the pot, stir and season to taste with additional salt and pepper.
Serve soup and top with bacon, cheese, chives and additional smoked paprika, if desired.
If you are dairy-free, you can use equal portions of either a dairy-free yogurt or homemade cashew cream in place of the sour cream.