Preheat your oven to 160°C (325°F).
Heat 1 tablespoon of olive oil in a large Dutch oven or oven-safe pot over medium heat.
Add the diced bacon and cook until crispy. Remove with a slotted spoon and set aside.
Season the beef cubes with salt and pepper.
In the same pot, sear the beef in batches until browned on all sides, about 2-3 minutes per side. Add the remaining olive oil as needed. Remove and set aside.
Add the carrots and onion to the pot, sautéing for 5-7 minutes until softened.
Stir in the garlic and cook for 1 minute until fragrant.
Sprinkle the flour over the vegetables, stirring well to coat.
Gradually pour in the red wine, scraping up any browned bits from the bottom of the pot.
Add the beef broth, tomato paste, thyme, and bay leaves, stirring to combine.
Return the seared beef and bacon to the pot, ensuring the meat is mostly submerged in the liquid.
Bring the mixture to a simmer, then cover the pot and transfer it to the preheated oven.
Cook for 2 hours, stirring halfway through, until the beef is tender and the sauce has thickened.
While the stew cooks, heat the butter in a skillet over medium heat and sauté the mushrooms until golden brown, about 5-7 minutes.
Stir the cooked mushrooms into the stew during the last 15 minutes of cooking.
Remove the pot from the oven, discard the bay leaves, and adjust seasoning with salt and pepper to taste.
Serve hot, garnished with fresh parsley if desired, alongside crusty bread or mashed potatoes.