This is based on a recipe I found long ago and have tweaked over the years
Swapping processed block cheese for sharp cheddar introduces immediate moisture separation issues because aged cheeses break down into oil and grainy solids rather than a smooth emulsion. Starch management dictates the final texture of potato soup. Boiling ten large peeled potatoes until fork-tender releases sufficient amylose into the cooking liquid, which is why reserving four cups of that specific potato water matters for natural thickening.
Render the bacon over medium-low heat for twelve minutes to yield the required four tablespoons of fat without scorching the fond needed for sautéing the celery and onions. Soften those aromatics for five minutes before introducing the dairy base. Velveeta melts reliably at 150 degrees Fahrenheit due to its emulsifying salts, protecting the milk and sour cream from curdling.