
Preheat your oven to 325°F (160°C).
In a large Dutch oven or oven-safe pot, cook the bacon over medium heat until crispy. Remove the bacon and set aside, leaving the rendered fat in the pot.
Season the beef cubes with salt and pepper. Dredge them in flour, shaking off any excess.
In the same pot, brown the beef cubes in batches. Remove the beef and set aside.
Add the onions and carrots to the pot and cook until softened, about 5-7 minutes. Add the garlic and cook for another minute.
Return the beef and bacon to the pot. Pour in the red wine and beef broth. Add the tomato paste, thyme, and bay leaf. Bring to a simmer.
Cover the pot and transfer it to the preheated oven. Braise for 2.5 to 3 hours, or until the beef is very tender.
Remove the pot from the oven. Add the mushrooms and cook on the stovetop over medium heat for about 10 minutes, or until the mushrooms are tender.
Season with salt and pepper to taste. Serve hot with mashed potatoes or crusty bread.