Heat the olive oil in a large pot over medium heat. Add the chopped bacon and cook until crisp. Remove the bacon with a slotted spoon and set it aside.
Add the beef cubes to the pot in a single layer. Brown them on all sides, then remove and set aside with the bacon.
Add the diced onion, sliced carrots, and minced garlic to the pot. Cook for 5 minutes until the onion softens.
Stir in the tomato paste and flour. Cook for 1 minute, scraping the bottom of the pot.
Pour in the red wine and beef broth. Return the beef and bacon to the pot. Add the thyme, bay leaf, salt, and pepper. Bring to a simmer.
Cover the pot and cook on low heat for 1 hour and 30 minutes, stirring occasionally.
Add the quartered mushrooms. Continue cooking uncovered for 20 more minutes until the sauce thickens and the beef is fork-tender.
Remove the thyme sprigs and bay leaf before serving.