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This paper addresses theoretical aspects of arithmetic circuit verification based on algebraic rewriting. Its goal is to advance the understanding of algebraic techniques for arithmetic circuit verification in the context of symbolic computer algebra. The paper offers a new insight into the arithmetic circuit verification problem, by viewing the computation performed by the circuit as the flow of digital data. In the proposed bit-flow model, the circuit is modeled as a network of logic components satisfying a bit-flow conservation law. We prove that the value of the flow of data in the circuit is invariant throughout the circuit and use this to prove soundness and completeness of the rewriting technique, independently from the computer algebra arguments. The efficiency of the method is illustrated with impressive results for large integer multipliers. The verification system and benchmarks are offered in an open source software environment. [ABSTRACT FROM AUTHOR]