Rinse and cover dry beans in water with 1 teaspoon baking soda. Soak for at least 8 hours. Drain and rinse beans, then add beans and enough water to cover by 2 inches in a large pot. Bring to a boil then reduce heat so beans are cooking at a rapid simmer for 1 hour. Check for doneness and add 2 teaspoons salt to the pot and continue to cook until beans are tender, about 30 more minutes.
In a skillet, fry the bacon pieces until fat is rendered and bacon is crisp. Remove from skillet and set aside. Saute chopped onion in 3 tablespoons of the bacon fat until caramelized; add garlic and cook until fragrant.
Mix hot water, vinegar, mustard, sugar, molasses, bbq sauce, bay leaf, and pepper in a bowl until well combined. Taste sauce and adjust seasoning as desired. Mix cooked beans, bacon, onions and garlic, and green chilies in a separate bowl until combined. Once mixed, pour into a large casserole dish and cover with the sauce mix. If needed, add additional water to cover the beans.
Cover and bake at 325º (or place in slow cooker on high) for 3-4 hours. Add liquid if necessary to keep beans just covered. For the last hour of baking, remove cover to allow sauce to evaporate and thicken, if needed. Remove bay leaf before serving.