
Preheat oven to 325°F (160°C). Cut the beef into 1-inch cubes and season with salt and pepper.
In a large Dutch oven or oven-safe pot, cook the bacon over medium heat until crisp. Remove bacon and set aside, reserving the bacon fat in the pot.
Brown the beef in batches in the bacon fat until seared on all sides. 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 until fragrant.
Return the beef and bacon to the pot. Sprinkle the flour over the mixture and cook for 1-2 minutes, stirring constantly.
Pour in the red wine and beef broth, scraping up any browned bits from the bottom of the pot. Add the tomato paste, thyme, and bay leaf.
Bring to a simmer, then cover the pot and transfer to the preheated oven. Cook for 2.5-3 hours, or until the beef is very tender.
Add the mushrooms to the pot and cook for another 30 minutes, or until the mushrooms are tender. Remove the bay leaf and thyme sprigs before serving. Serve hot with mashed potatoes or crusty bread.