Place a large pot over medium heat and add the chopped bacon. Cook until the bacon is crisp, then remove it with a slotted spoon and set it aside, leaving the fat in the pot.
Add the macaroni, milk, water, garlic powder, salt, and pepper to the pot. Stir to combine and bring the mixture to a gentle simmer.
Cook for 10 to 12 minutes, stirring often, until the macaroni is tender and most of the liquid has been absorbed.
Remove the pot from the heat and stir in the shredded cheddar until the sauce is smooth and creamy.
Return the cooked bacon to the pot and stir it through the macaroni before serving.