Press Sauté on the Instant Pot and heat for about a minute. Melt the butter, then cook the diced onion for 3 to 4 minutes until soft and translucent. Add the minced garlic and stir for about 30 seconds, just until fragrant, without letting it brown.
Pour in about ½ cup (120 ml) of the chicken broth and scrape the bottom of the insert with a wooden spoon to lift any browned bits. This prevents a burn warning later.
Turn off the Sauté function. Add the cubed potatoes, remaining broth, salt, black pepper, and dried thyme. Stir once to distribute the seasoning, then press the potatoes down so the liquid mostly covers them.
Secure the lid and set the valve to Sealing. Select Pressure Cook or Manual on high pressure and set the timer to 8 minutes. The pot will take roughly 10 minutes to come up to pressure.
When the timer beeps, let the pressure release naturally for 10 minutes. Then move the valve to Venting to release any remaining pressure, waiting until the pin drops before opening the lid away from your face.
Use a potato masher to gently break down about half the potatoes, or pulse briefly with an immersion blender. Whisk the cornstarch into the heavy cream until no lumps remain, then press Sauté and stir the slurry into the soup. Simmer for 3 to 4 minutes, stirring often, until thickened.
Turn off the heat. Stir in the shredded cheddar a handful at a time until melted, then add half the crumbled bacon and the sour cream if using. Taste and adjust salt, then ladle into bowls and top with remaining bacon, more cheese, and sliced green onions.