Place beans in a large pot with a tight-fitting cover and add enough water to cover beans by about 2 inches. Bring to a boil over high heat. Meanwhile, place bacon, onion, and garlic in a medium cast iron frying pan and brown the mixture, while stirring, over medium heat. Add bacon mixture to beans. Reduce heat and simmer until beans are soft, about 3 hours total cooking time, adding more hot water if needed. Add chili powder, sugar, salt, pepper, diced tomatoes with green chiles, and jalapeno peppers. Simmer for another 10 minutes and then serve.
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